Enough. How do I invest in Australia. [as a US investor]

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TomCat96
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Enough. How do I invest in Australia. [as a US investor]

Post by TomCat96 » Thu Aug 16, 2018 3:54 pm

There has been a claim, not the first I have heard on this site, that Australia securities have grown faster than US securities since 1900.

I follow the data. I don't follow feelings. I don't follow schools of thought. I don't believe in International vs US. I don't care.

I'm here to make money.
How do I invest in Australia, per this claim? I am currently 0% international. At a minimum, some exposure to Australia would diversify me somewhat.

I'm not interested in claims that past performance doesn't guarantee future results. Evidence is evidence, and I'm ready to use it. Does anyone know what metrics were used to make this claim, and how I can incorporate Australian securities into my portfolio?

MichCPA
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Re: Enough. How do I invest in Australia.

Post by MichCPA » Thu Aug 16, 2018 4:00 pm

Ticker EWA is the iShares MSCI Australia ETF. It targets large and mid companies and has a .49 ER. I wouldn't, but you asked.

minimalistmarc
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Re: Enough. How do I invest in Australia.

Post by minimalistmarc » Thu Aug 16, 2018 4:00 pm

Buy an Australian index tracker fund or ETF

TomCat96
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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Thu Aug 16, 2018 4:02 pm

I want to invest in Australia, per the repeated claim, that the Australian stock market has outperformed the US market since 1900.

I don't want to invest in some random Australian ETF that started in 2002 and has underperformed the US indices.
Somewhere, somehow, on this site, there is the repeated claim that the Australian Stock market has outperformed the US over the past 118 years. I aim to find out exactly the composition of the index for the purposes of investing in it.

TomCat96
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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Thu Aug 16, 2018 4:12 pm

I repeat. I want to use the data on the exact index used to achieve the performance for the claim that Australia has outperformed the US for the past 118 years. My goal is not to pick a general Australian index fund and invest in that. That's not the basis for the claim. I want to crack open the mystery of what makes that market so good? What makes it superior.

Based on my preliminary investigations, the more recently created Australian index funds have not outperformed US index funds.
For example, the VXF appears to have dramatically outperformed EWA since it's inception.

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.

So I ask again, what am I missing.

qwertyjazz
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Re: Enough. How do I invest in Australia.

Post by qwertyjazz » Thu Aug 16, 2018 4:22 pm

TomCat96 wrote:
Thu Aug 16, 2018 4:12 pm
I repeat. I want to use the data on the exact index used to achieve the performance for the claim that Australia has outperformed the US for the past 118 years. My goal is not to pick a general Australian index fund and invest in that. That's not the basis for the claim. I want to crack open the mystery of what makes that market so good? What makes it superior.

Based on my preliminary investigations, the more recently created Australian index funds have not outperformed US index funds.
For example, the VXF appears to have dramatically outperformed EWA since it's inception.

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.

So I ask again, what am I missing.
118 years ago there were no index funds let alone mutual funds. You are comparing apples to oranges. An analyses of stocks if such a thing as index existed vs index over a defined time period.
This is more belief/religion/theory driven. Which kind of past data do you believe in?
G.E. Box "All models are wrong, but some are useful."

HEDGEFUNDIE
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Re: Enough. How do I invest in Australia.

Post by HEDGEFUNDIE » Thu Aug 16, 2018 4:43 pm

TomCat96 wrote:
Thu Aug 16, 2018 4:12 pm

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.
You are probably trolling us, but I have to ask, what rationale do you have to completely avoid US large-caps?

patrick
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Re: Enough. How do I invest in Australia.

Post by patrick » Thu Aug 16, 2018 4:46 pm

The Credit Suisse yearbook has some brief ideas about what made Australia do well (see page 38 of http://publications.credit-suisse.com/t ... 5D3A968D73) but I doubt they really know why. You'll probably have to look in their associated sourcebook (which is not available for free) for more details about the index, although as I understand it they are as close as they can get to total market indexes.

EWA is a cap weighted index but excludes small caps. It is still probably as close as you can get to a total Australian market fund among US listed ETFs.

VXF is the not the whole US market. It is something like 20 to 25 percent of US market cap, and as of late it has done much better than the overall US market. It's probably also done better than most if not all total major foreign markets (though not always better than the best parts of such foreign markets).

ETFwhisperer
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Re: Enough. How do I invest in Australia.

Post by ETFwhisperer » Thu Aug 16, 2018 5:11 pm

The first Australian equity index was the All Ordinaries, which started in 1980. Any index that purports to show equity returns before then is potentially influenced by survivorship bias. Also keep in mind that the Australian dollar has historically inflated faster than the USD.
"Experience was of no ethical value. It was merely the name we gave to our mistakes." --Oscar Wilde

magicrat
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Re: Enough. How do I invest in Australia.

Post by magicrat » Thu Aug 16, 2018 5:30 pm

Care to share some links to these claims?

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nisiprius
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Re: Enough. How do I invest in Australia.

Post by nisiprius » Thu Aug 16, 2018 5:37 pm

TomCat96 wrote:
Thu Aug 16, 2018 3:54 pm
...I'm not interested in claims that past performance doesn't guarantee future results...
That's not a "claim," that's a fact.
Evidence is evidence, and I'm ready to use it.
Evidence is evidence, and I'm ready to use the evidence that past performance doesn't guarantee future results.
Does anyone know what metrics were used to make this claim, and how I can incorporate Australian securities into my portfolio?
Eh, probably the Dimson & al. data from the book Triumph of the Optimists and the subsequent updates in the Credit Suisse Global Returns Yearbook series. Alas, they recently cut down on the number of countries they show you in the no-cost downloadable reports, but the one from 2016 still has Australia, I think.

One reason for thinking it's Dimson & al. is that you mentioned 1900, and that's when their data sets begin.

Download it here and look at page 38, Australia.

CAGR for Australian equities, 1900 through 2015, 6.7% real, compared to 6.4% for the US. I don't see that as terribly greed-inspiring, but that's probably the data people are referring to. I am not aware of any investments that attempt to duplicate the composition of the Dimson & al data, sorry. (My guess is that for the last few decades their data is just some obvious well-known index, and that it's only as you go back in time that the hardcore research begins.)

The country-to-country differences in Dimson & al. usually show an obvious influence from historical facts everyone knows about what happened to those countries during World War II. And then, too, countries whose stock markets vanished as a result of revolutions didn't do very well.

Image

Image
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Valuethinker
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Re: Enough. How do I invest in Australia.

Post by Valuethinker » Thu Aug 16, 2018 6:03 pm

TomCat96 wrote:
Thu Aug 16, 2018 3:54 pm
There has been a claim, not the first I have heard on this site, that Australia securities have grown faster than US securities since 1900.

I follow the data. I don't follow feelings. I don't follow schools of thought. I don't believe in International vs US. I don't care.

I'm here to make money.
How do I invest in Australia, per this claim? I am currently 0% international. At a minimum, some exposure to Australia would diversify me somewhat.

I'm not interested in claims that past performance doesn't guarantee future results. Evidence is evidence, and I'm ready to use it. Does anyone know what metrics were used to make this claim, and how I can incorporate Australian securities into my portfolio?
Be sure and put 100% of your portfolio into Australian stocks.

You wouldn't want to miss out on the next 116 years.

ETFwhisperer
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Re: Enough. How do I invest in Australia.

Post by ETFwhisperer » Thu Aug 16, 2018 6:11 pm

Unfortunately I'm only planning to live for another hundred years 😉.
"Experience was of no ethical value. It was merely the name we gave to our mistakes." --Oscar Wilde

JBTX
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Re: Enough. How do I invest in Australia.

Post by JBTX » Thu Aug 16, 2018 8:57 pm

nisiprius wrote:
Thu Aug 16, 2018 5:37 pm
TomCat96 wrote:
Thu Aug 16, 2018 3:54 pm
...I'm not interested in claims that past performance doesn't guarantee future results...
That's not a "claim," that's a fact.
Evidence is evidence, and I'm ready to use it.
Evidence is evidence, and I'm ready to use the evidence that past performance doesn't guarantee future results.
Does anyone know what metrics were used to make this claim, and how I can incorporate Australian securities into my portfolio?
Eh, probably the Dimson & al. data from the book Triumph of the Optimists and the subsequent updates in the Credit Suisse Global Returns Yearbook series. Alas, they recently cut down on the number of countries they show you in the no-cost downloadable reports, but the one from 2016 still has Australia, I think.

One reason for thinking it's Dimson & al. is that you mentioned 1900, and that's when their data sets begin.

Download it here and look at page 38, Australia.

CAGR for Australian equities, 1900 through 2015, 6.7% real, compared to 6.4% for the US. I don't see that as terribly greed-inspiring, but that's probably the data people are referring to. I am not aware of any investments that attempt to duplicate the composition of the Dimson & al data, sorry. (My guess is that for the last few decades their data is just some obvious well-known index, and that it's only as you go back in time that the hardcore research begins.)

The country-to-country differences in Dimson & al. usually show an obvious influence from historical facts everyone knows about what happened to those countries during World War II. And then, too, countries whose stock markets vanished as a result of revolutions didn't do very well.

Image

Image


Looking at those graphs it appears perhaps all of the Australian out performance is due to the 1930s. Australia didn't take much of a hit during great depression. The US lost much more than 50% After that I suspect the returns are pretty similar.

Australia is somewhat of a natural resources commodities play and is probably more linked to the Chinese economy, for better or for worse.

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Re: Enough. How do I invest in Australia.

Post by AlohaJoe » Thu Aug 16, 2018 9:30 pm

JBTX wrote:
Thu Aug 16, 2018 8:57 pm
Looking at those graphs it appears perhaps all of the Australian out performance is due to the 1930s. Australia didn't take much of a hit during great depression. The US lost much more than 50% After that I suspect the returns are pretty similar.
Here's the decade-by-decade performance comparison from Triumph of the Optimists. (All numbers are Australia/US)

1900-1909: 11.8 / 7.8
1910-1919: 3.9 / -2.6
1920-1929: 16.3 / 14.4
1930-1939: 9.5 / 1.9
1940-1949: 3.2 / 4.0
1950-1959: 8.9 / 15.7
1960-1969: 10.6 / 5.6
1970-1979: -4.6 / -0.7
1980-1989: 8.6 / 11.0
1990-2000: 8.1 / 11.4

Australia has underperformed since 1970 (though their returns still weren't "bad", they just didn't have the amazing 11% per year returns the US had for 2 decades) after outperforming for (most of) 1900-1970.

Australia is actually a great example of how recency bias can sucker in an investor. Imagine it is 1969 and you're looking at 70 years of investing history between the US & Australia. You'd be crazy to invest in the US, right? 70 years of underperformance!. Except not it has been 40 years of Australian underperformance. How long would have chanted "mean reversion mean reversion mean reversion" before throwing in the towel? What does "mean reversion" even mean in a situation like this anyway?

Australia total historical performance is so good because:
  • Only one down decade in over a century (1970-1980)
  • That down decade was (relatively) mild (-4.6%; remember that a -5% loss requires (approximately) 10% gain to balance it out, so just a few points in losses make a big difference)
  • Consistently high real returns -- 7 of those 10 decades had over 8% real returns.
Now let's take a look at two "bad" countries, to see what "bad returns" usually look like in a century long perspective (leaving aside scenarios like "Japan had atomic bombs dropped on it):

Here's Italy:
1900-1909: 4.4
1910-1919: -2.8
1920-1929: 2.4
1930-1939: 9.6
1940-1949: -11.5
1950-1959: 19.7
1960-1969: 0.1
1970-1979: -11.7
1980-1989: 14.4
1990-2000: 6.3

There are 3 decades with negative returns. And two of those had double-digit negative returns. And the positive years often weren't so great, only 3 decades had greater than 8% returns (compared to 7 for Australia)

And Denmark:
1900-1909: 3.2
1910-1919: 2.2
1920-1929: 1.9
1930-1939: 5.0
1940-1949: 1.2
1950-1959: 7.5
1960-1969: 1.0
1970-1979: 0.3
1980-1989: 16.7
1990-2000: 7.9

Even though they don't have any "lost decades" -- every decade has positive returns -- the returns aren't exactly exciting. Only 1 year breaks 8% (compared to 7 for Australia) and only 3 years break 5%.

JBTX
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Re: Enough. How do I invest in Australia.

Post by JBTX » Thu Aug 16, 2018 10:05 pm

AlohaJoe wrote:
Thu Aug 16, 2018 9:30 pm
JBTX wrote:
Thu Aug 16, 2018 8:57 pm
Looking at those graphs it appears perhaps all of the Australian out performance is due to the 1930s. Australia didn't take much of a hit during great depression. The US lost much more than 50% After that I suspect the returns are pretty similar.
Here's the decade-by-decade performance comparison from Triumph of the Optimists. (All numbers are Australia/US)

1900-1909: 11.8 / 7.8
1910-1919: 3.9 / -2.6
1920-1929: 16.3 / 14.4
1930-1939: 9.5 / 1.9
1940-1949: 3.2 / 4.0
1950-1959: 8.9 / 15.7
1960-1969: 10.6 / 5.6
1970-1979: -4.6 / -0.7
1980-1989: 8.6 / 11.0
1990-2000: 8.1 / 11.4

Australia has underperformed since 1970 (though their returns still weren't "bad", they just didn't have the amazing 11% per year returns the US had for 2 decades) after outperforming for (most of) 1900-1970.

Australia is actually a great example of how recency bias can sucker in an investor. Imagine it is 1969 and you're looking at 70 years of investing history between the US & Australia. You'd be crazy to invest in the US, right? 70 years of underperformance!. Except not it has been 40 years of Australian underperformance. How long would have chanted "mean reversion mean reversion mean reversion" before throwing in the towel? What does "mean reversion" even mean in a situation like this anyway?

Australia total historical performance is so good because:
  • Only one down decade in over a century (1970-1980)
  • That down decade was (relatively) mild (-4.6%; remember that a -5% loss requires (approximately) 10% gain to balance it out, so just a few points in losses make a big difference)
  • Consistently high real returns -- 7 of those 10 decades had over 8% real returns.
Now let's take a look at two "bad" countries, to see what "bad returns" usually look like in a century long perspective (leaving aside scenarios like "Japan had atomic bombs dropped on it):

Here's Italy:
1900-1909: 4.4
1910-1919: -2.8
1920-1929: 2.4
1930-1939: 9.6
1940-1949: -11.5
1950-1959: 19.7
1960-1969: 0.1
1970-1979: -11.7
1980-1989: 14.4
1990-2000: 6.3

There are 3 decades with negative returns. And two of those had double-digit negative returns. And the positive years often weren't so great, only 3 decades had greater than 8% returns (compared to 7 for Australia)

And Denmark:
1900-1909: 3.2
1910-1919: 2.2
1920-1929: 1.9
1930-1939: 5.0
1940-1949: 1.2
1950-1959: 7.5
1960-1969: 1.0
1970-1979: 0.3
1980-1989: 16.7
1990-2000: 7.9

Even though they don't have any "lost decades" -- every decade has positive returns -- the returns aren't exactly exciting. Only 1 year breaks 8% (compared to 7 for Australia) and only 3 years break 5%.
Interesting data. Your data seems to confirm my observation that Australia hasn't outperformed the US since 1940. And Denmark seems to compare favorably since 1970. I don't know what 2000-2018 looks like.

daveydoo
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Re: Enough. How do I invest in Australia.

Post by daveydoo » Thu Aug 16, 2018 10:13 pm

JBTX wrote:
Thu Aug 16, 2018 8:57 pm

Looking at those graphs it appears perhaps all of the Australian out performance is due to the 1930s. Australia didn't take much of a hit during great depression. The US lost much more than 50% After that I suspect the returns are pretty similar.
This. Do try to avoid future depressions. I think that is going to be key. :D

OTOH, that may be a legitimate case for Australia going forward...
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

jbranx
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Re: Enough. How do I invest in Australia.

Post by jbranx » Thu Aug 16, 2018 10:30 pm

Australia is in its 26th year without a recession so far, a fair bit better than the rest of the developed world for sure. Apparently being recession proof for that long and having an export economy tied to China, the miracle growth story of the last half of the last century, is still not good enough to have an outperforming stock market. The fact that Murdoch moved his operations out of the country may be one factor, though I think S&P, which owns the indices there, did put part of his empire back in the country index.

financeperchance
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Re: Enough. How do I invest in Australia.

Post by financeperchance » Thu Aug 16, 2018 11:18 pm


andrew99999
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Re: Enough. How do I invest in Australia.

Post by andrew99999 » Fri Aug 17, 2018 4:00 am

Your reasoning does not make sense to me. If you want to out perform, increase your higher risk higher reward allocations - small, value, and emerging markets.

Here is an article showing the accumulation index (ie dividends reinvested) of the Australian vs US index since 1900
https://cuffelinks.com.au/wins-australi ... al-shares/


Anyway, some technical information about the Australian market just for your information.

The market has massive concentration risk.
The top 10 companies make up something like 40% of the market.
Half of the market share is made up of 2 industries - banks and mining.
This is the opposite of diversification. If one of these goes down, there will be a good chance of recession which will affect the whole country.
Issues with China (which is volatile) would affect mining in a big way.
Issues with the massively over priced cost of property correcting would affect the banking sector which makes up around 1/3 of the whole market and will have a flow on effect to the whole country in a very big way.

One other thing is that there has been no recession for 27 years. A recession is a normal part of the economic cycle where it corrects downwards and tends to happen around every 10 or so years. The longer the time without one, the more it will correct when it comes. It will happen, but who knows if it will be in 2 years or in 20 year, so this in an of itself is not a reason to avoid investing, just something to be aware of.

Some of the info from investors in Australia that I have found -

1. They have a huge home country bias, in part because of the same reason everyone else does (unable to see past their own door step), but also they get a credit for company tax paid on dividends before they are paid out, so they essentially get a "before tax" income from dividends as 100/70 x actual dividend amount for shares from Australian companies paid to them. This has led investors to demand a higher payout ratio from profits, so average dividends are around 4%, which means "grossed up" income (before tax but after credit for tax already paid by companies) is actually 100/70 x 4% = 5.7%. This would allow you to much more easily live off dividends, but only if you assume that the law won't be changed which current politicians are talking about.
As a non-resident of Australia, you do not get this extra amount anyway.

2. Small caps there contain a lot of rubbish, and active management in the small caps area out perform the index over long periods.
https://cuffelinks.com.au/six-investmen ... piva-data/

3. If you were Australian you should beware of the massive concentration risk and not put so much in home country assets. However as someone from outside Australia, if there is a lot of concentration in the market, it wouldn't matter to you since you are using this as your diversification out of your main portfolio, provided of course you did not put a massiver proportion in there.

4. You are also taking on currency risk, and this is not a small thing.


The comments in this thread have been exactly spot on by the way. It depends entirely on the period of time. You could invest and have it under perform for the next 10, 20, or 30 years, or you could invest and it could over perform in any of those periods. I personally would stick with a world diversified portfolio (US, Developed, Emerging, Big & Small for each), and if I was at least 20 years from retirement, just overweight the higher risk higher return ones a bit (small, value, emerging markets).

Valuethinker
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Re: Enough. How do I invest in Australia.

Post by Valuethinker » Fri Aug 17, 2018 4:08 am

JBTX wrote:
Thu Aug 16, 2018 8:57 pm

Looking at those graphs it appears perhaps all of the Australian out performance is due to the 1930s. Australia didn't take much of a hit during great depression. The US lost much more than 50% After that I suspect the returns are pretty similar.

Australia is somewhat of a natural resources commodities play and is probably more linked to the Chinese economy, for better or for worse.
Which is very strange.

Australia had one of the worst falls in GDP during the Depression - perhaps the worst of the Anglosphere. Worse even than Canada.

The country was totally dependent on agricultural exports - wheat, wool, lamb. When food prices collapsed and countries threw up trade barriers to protect their own farmers, Australia really suffered. Mining also did not do well. The Commonwealth government was somewhat overwhelmed.

Later there was "Imperial preference" in British tariffs and that did help.

I wonder what was in the stock market index that did so well?

zuma
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Re: Enough. How do I invest in Australia.

Post by zuma » Fri Aug 17, 2018 4:17 am

magicrat wrote:
Thu Aug 16, 2018 5:30 pm
Care to share some links to these claims?
Probably this exchange, in which the relevant source for the claim was provided.

buylowbuyhigh
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Re: Enough. How do I invest in Australia.

Post by buylowbuyhigh » Fri Aug 17, 2018 4:24 am

In the 2016 Credit Suisse yearbook, between 1966-2015 US equities have 5.3% return, World ex-USA 5.4% but the whole world 5% :confused Also all in USD

TomCat96
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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Wed Aug 29, 2018 9:04 pm

HEDGEFUNDIE wrote:
Thu Aug 16, 2018 4:43 pm
TomCat96 wrote:
Thu Aug 16, 2018 4:12 pm

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.
You are probably trolling us, but I have to ask, what rationale do you have to completely avoid US large-caps?
Not trolling. I really do have 100% in VXF. VXF is more diversified in VXF, and although I'm sure many will disagree, all three facets of the US market I believe are inextricably linked: small caps, mid caps, large caps.

Based on my backtesting, I get slightly better returns with diversified small and midcaps, albeit at a considerably higher volatility, but I'm alright with that.

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Noobvestor
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Re: Enough. How do I invest in Australia.

Post by Noobvestor » Wed Aug 29, 2018 9:22 pm

TomCat96 wrote:
Wed Aug 29, 2018 9:04 pm
HEDGEFUNDIE wrote:
Thu Aug 16, 2018 4:43 pm
TomCat96 wrote:
Thu Aug 16, 2018 4:12 pm

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.
You are probably trolling us, but I have to ask, what rationale do you have to completely avoid US large-caps?
Not trolling. I really do have 100% in VXF. VXF is more diversified in VXF, and although I'm sure many will disagree, all three facets of the US market I believe are inextricably linked: small caps, mid caps, large caps.

Based on my backtesting, I get slightly better returns with diversified small and midcaps, albeit at a considerably higher volatility, but I'm alright with that.
It's not really about disagreeing so much as facts. VXF is by definition less diversified because it covers less of the market than VTI. Would also be careful of relying so much on backtesting. I don't know what else to say other than what others have said above, so I guess I'll leave it at that.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

TomCat96
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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Wed Aug 29, 2018 9:22 pm

I want to thank everyone here for the replies. They are quite illuminating. But in a sense, also disappointing.

One reason I don't invest in international stocks, is because VXUS, and its variants have underperformed for too long for too long. At this point 22 years.

Being situated in the United States, I find that some degree of burden has to be satisfied before I diversify internationally. I have my reasons, which I wont repeat here, but suffice it to say, there are certain qualities about a market that must be satisfied before I decide to allocate to it. The analysis is too complex for any one person to reason, so we turn to the evidence--the actual returns.

Australia was interesting to me. With respect to my portfolio, it would allow me to diversify my current position, without necessarily sacrificing on returns.

I say it is a little disappointing however because there does not seem to be an overt fund I can invest in, which would capture the benefits of that growth rate. Im looking for a practical step I can actually take.

It is ok for australia to be overly concentrated. Just because a single investment in Australia is in itself an overly concentrated bet, doesn't mean that diversifying into Australia would make my portfolio overly concentrated.

A 100% asset allocation in the US, assuming 10% a year CAGR nominal will have variance sigma²
Assuming Australia at 100% returns ~10% CAGR, what I hope to achieve is some allocation into australia, reducing the variance of my overall portfolio. Because returns are similar, my returns would not be compromised if the returns are sustained into the future. Similarly, because Australia is not the same as the US, I would expect less than a correlation of 1--which would inherently diversify my position.

It could be 90/10, 80/20, whatever.

With ~100 years of empirical results, that's the kind of evidence I am looking for.
It does not look like however I will be able to use what has been told here in the way I want.

TomCat96
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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Wed Aug 29, 2018 9:36 pm

Noobvestor wrote:
Wed Aug 29, 2018 9:22 pm
TomCat96 wrote:
Wed Aug 29, 2018 9:04 pm
HEDGEFUNDIE wrote:
Thu Aug 16, 2018 4:43 pm
TomCat96 wrote:
Thu Aug 16, 2018 4:12 pm

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.
You are probably trolling us, but I have to ask, what rationale do you have to completely avoid US large-caps?
Not trolling. I really do have 100% in VXF. VXF is more diversified in VXF, and although I'm sure many will disagree, all three facets of the US market I believe are inextricably linked: small caps, mid caps, large caps.

Based on my backtesting, I get slightly better returns with diversified small and midcaps, albeit at a considerably higher volatility, but I'm alright with that.
It's not really about disagreeing so much as facts. VXF is by definition less diversified because it covers less of the market than VTI. Would also be careful of relying so much on backtesting. I don't know what else to say other than what others have said above, so I guess I'll leave it at that.
Unfortunately, I cannot fully express my position in a current asset allocation, so suffice it to say that, I have reason to believe in my later years, I will have alternate sources of income I can rely upon, which affects the amount of risk I can take on now.

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Re: Enough. How do I invest in Australia.

Post by Noobvestor » Wed Aug 29, 2018 9:53 pm

TomCat96 wrote:
Wed Aug 29, 2018 9:36 pm
Noobvestor wrote:
Wed Aug 29, 2018 9:22 pm
TomCat96 wrote:
Wed Aug 29, 2018 9:04 pm
HEDGEFUNDIE wrote:
Thu Aug 16, 2018 4:43 pm
TomCat96 wrote:
Thu Aug 16, 2018 4:12 pm

And before anyone accuses me of cherry picking, that point is relevant to me. Not only am I 100% US stocks at the moment, I am 100% invested in VXF, the Vanguard Extended Market.
You are probably trolling us, but I have to ask, what rationale do you have to completely avoid US large-caps?
Not trolling. I really do have 100% in VXF. VXF is more diversified in VXF, and although I'm sure many will disagree, all three facets of the US market I believe are inextricably linked: small caps, mid caps, large caps.

Based on my backtesting, I get slightly better returns with diversified small and midcaps, albeit at a considerably higher volatility, but I'm alright with that.
It's not really about disagreeing so much as facts. VXF is by definition less diversified because it covers less of the market than VTI. Would also be careful of relying so much on backtesting. I don't know what else to say other than what others have said above, so I guess I'll leave it at that.
Unfortunately, I cannot fully express my position in a current asset allocation, so suffice it to say that, I have reason to believe in my later years, I will have alternate sources of income I can rely upon, which affects the amount of risk I can take on now.
I'm not arguing against the amount of risk you're taking, just your definition of 'diversification'. You are not more diversified holding VXF than VTI. Full stop. More broadly, I can't really tell what's driving your choices. There are higher risk and higher return options than Vanguard Extended Market. Even if you're going entirely based on backtesting, that seems like an odd option to land on - how did you choose it?
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: Enough. How do I invest in Australia.

Post by Noobvestor » Wed Aug 29, 2018 10:00 pm

I did a quick scan back through your posting history and found this in another thread:
TomCat96 wrote:
Sat Jan 16, 2016 4:14 pm
34 years old and currently 90% treasuries, 10% equities.

I'm just waiting to jump back in. I agree with the other side however. This drop has been nothing.
It's barely a correction, and stocks are still too high historically speaking.

Some indicators show that at least half of market participants are still bullish.

We all know that bear markets happen periodically, and we're not there yet, nor are we close.
S&P would have to hit around 1720 i.e. another 8.5% loss.

So a few years back, you were virtually all-in with Treasuries. Now you're all-in with US small/mid-caps. I don't know how long you stayed with the older portfolio, but I imagine it lagged the market. Now you're back in US stocks at even higher valuations. I really think you could benefit from picking and sticking to an allocation you're comfortable with, or maybe a Target Date or Life Strategy fund that you can set and forget.
Last edited by Noobvestor on Wed Aug 29, 2018 10:10 pm, edited 2 times in total.
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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Wed Aug 29, 2018 10:09 pm

Noobvestor wrote:
Wed Aug 29, 2018 10:00 pm
I did a quick scan back through your posting history and found this in another thread:
TomCat96 wrote:
Sat Jan 16, 2016 4:14 pm
34 years old and currently 90% treasuries, 10% equities.

I'm just waiting to jump back in. I agree with the other side however. This drop has been nothing.
It's barely a correction, and stocks are still too high historically speaking.

Some indicators show that at least half of market participants are still bullish.

We all know that bear markets happen periodically, and we're not there yet, nor are we close.
S&P would have to hit around 1720 i.e. another 8.5% loss.

So a few years back, you were virtually all-in with Treasuries. Now you're all-in with US small/mid-caps. I don't know how long you stayed with the older portfolio, but I imagine it lagged the market. Now you're all stock at even higher valuations. I really think you could benefit from picking and sticking to an allocation you're comfortable with, or maybe a Target Date or Life Strategy fund that you can set and forget.
I regret doing that. I was newer to the philosophy then.
I was successful in timing the market in a series of moves that managed to outperform the market. In retrospect, it was pretty lucky.

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Re: Enough. How do I invest in Australia.

Post by Noobvestor » Wed Aug 29, 2018 10:18 pm

TomCat96 wrote:
Wed Aug 29, 2018 10:09 pm
Noobvestor wrote:
Wed Aug 29, 2018 10:00 pm
So a few years back, you were virtually all-in with Treasuries. Now you're all-in with US small/mid-caps. I don't know how long you stayed with the older portfolio, but I imagine it lagged the market. Now you're all stock at even higher valuations. I really think you could benefit from picking and sticking to an allocation you're comfortable with, or maybe a Target Date or Life Strategy fund that you can set and forget.
I regret doing that. I was newer to the philosophy then.
I was successful in timing the market in a series of moves that managed to outperform the market. In retrospect, it was pretty lucky.
I mean, OK, but do you buy the philosophy now? Because if you do, you might want to diversify beyond US small/mid, and not just into specific countries with histories of outperformance. A three-fund portfolio would be a good starting point. You can add tilts from there.

As to your original question: it has indeed been answered in other comments. An Australia index ETF is what you wanted. It'll track the country you're interested in. But the future really won't look like the past anyway, so ... well, my signature line below sums it up.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: Enough. How do I invest in Australia.

Post by TomCat96 » Thu Aug 30, 2018 12:31 am

Noobvestor wrote:
Wed Aug 29, 2018 10:18 pm
TomCat96 wrote:
Wed Aug 29, 2018 10:09 pm
Noobvestor wrote:
Wed Aug 29, 2018 10:00 pm
So a few years back, you were virtually all-in with Treasuries. Now you're all-in with US small/mid-caps. I don't know how long you stayed with the older portfolio, but I imagine it lagged the market. Now you're all stock at even higher valuations. I really think you could benefit from picking and sticking to an allocation you're comfortable with, or maybe a Target Date or Life Strategy fund that you can set and forget.
I regret doing that. I was newer to the philosophy then.
I was successful in timing the market in a series of moves that managed to outperform the market. In retrospect, it was pretty lucky.
I mean, OK, but do you buy the philosophy now? Because if you do, you might want to diversify beyond US small/mid, and not just into specific countries with histories of outperformance. A three-fund portfolio would be a good starting point. You can add tilts from there.

As to your original question: it has indeed been answered in other comments. An Australia index ETF is what you wanted. It'll track the country you're interested in. But the future really won't look like the past anyway, so ... well, my signature line below sums it up.
I'm going to respond to you with a largely irrelevant post that I don't have time to edit.
Over a year ago, I wrote a post I had intended to edit, in another thread, far far away. I never posted it. (at least not that i recall)
But I inadvertantly found the post tonight. It was based on the results I got from portfoliovisualizer, a short while prior to writing this entry that I decided to move 100% VXF. this should articulate somewhat why I went the way I did.


"I think there's a way to reconcile all the definitions. When I was trying to figure out my asset allocations I obsessed for weeks over trying to find some special asset allocation to do better than the S&P 500. What I found is exactly what our collective intuition suggested.

1. One could generally increase their returns by reducing their bond allocation and increase their equities.
2. Once I modified my portfolios to hit 100% equities, I could not seem to find any combination of equities that was consistently superior to other equity allocations. They all returned approximately 10% a year nominal, give or take.

For example, Suppose person A puts all their money in an S&P 500 index fund. Suppose person B put their money in Vanguard total stock market, with of international, with a small proportion of EM. From what I could tell, in the long run, they're both going to do roughly the same. The differences are small enough to effectively be noise. There's a reason why boglehead philosophy is "stay the course" instead of "Equities + International + EM is the best portfolio" In the long run, there doesn't seem to be much of a difference.

At best I was able to ascertain that there might be a small increase in expected annual gains per year by weighting heavily on a mixture of small and midcaps. I am not the first to notice this either. Midcaps have historically outperformed other equities allocation.

A quick search on bogleheads immediately finds the following:
viewtopic.php?t=198621 "Why are Midcaps the sweet spot?"
viewtopic.php?t=158248 "Midcaps, why does it seem to beat total stock market"
viewtopic.php?t=132028 "Tell me why I should not be overweight midcap index"

My personal analysis confirmed the trend, but it's small and subtle enough that I would not necessarily go chasing it. It does however confirm once again our collective intuition: Take on more risk, and you can expect slightly higher returns.

But here's the thing. Suppose the market returns 10% a year nominal, and you can find a risk but diversified asset allocation that returns 11% a year. Can you find a diversified risky allocation that returns 15% a year, 20% a year, 25%? I could not. Every asset allocation I backtested returned something like: 10.1%, 9.5%, 9.3%, 10.7%, 8.9%, 11%....you get the idea. *

These were my final conclusions:
You can trade risk for returns up to 0% bonds, 100% equities. After that you can still trade risk for returns slightly by overweighting small and midcaps. After overweighting small and midcaps, the risk/return relationship breaks down. I personally did not find that overweighting international EM would outperform US small and Midcaps in the long run. Nor does slice and dicing, nor does overweighting particular sectors.

In other words, the assertion that "the market is efficient" or that the "market can't be beat" can actually by found in the data itself. You cannot beat that fuzzy 10% a year nominal boundary for the most part.* The domains of all diversified equities portfolios disperse centrally around that 10% a year figure. All equities portfolios converge asymptotically upon that figure. And even if you want to trade more risk for returns, you will not be able to do it. The risk to reward relationship breaks down.

And I would venture a guess to say that the efficiency of any market necessarily occurs where the risk to reward relationship breaks down. Where taking on additional risk no longer reliably gives you additional gains.



*Let's put some real numbers down. I backtested about 100 different portfolios of 100% equities. No portfolio did better than 12% per year nominal. In fact, I don't even recall any portfolio doing better than 11.5%. The vast majority hovered between 8 and 11."

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Re: Enough. How do I invest in Australia.

Post by Noobvestor » Thu Aug 30, 2018 1:06 am

I agree that short of using leverage you're not going to out-risk a 100% stock portfolio. Historically, an 80% stock portfolio has yielded ~9.6% annualized versus a 100% stock portfolio at ~10.3% annualized. The incremental gains at that point aren't worth it to me, but to each their own.

But the problem is you're ignoring entirely plausible outcomes, like: large beats mid/small for a long period, or international beats US for a long period, or stocks simply underperform bonds for a long period. All of these have happened before, and will happen again. You may be testing over periods that bury some of that variety under the noise, or based on start/end points, but all of this stuff really does diverge at times.

There is absolutely no guarantee (indeed, I would argue it's quite unlikely) you'll see 10% nominal returns going forward for US stocks. In fact, Vanguard estimates ~5% for the coming decade for a global 100% stock portfolio (less than 4% for US-only). No one can say for sure, but you're betting it all on the market that has gone way up, may come way down - not sure if you were investing from 2000 to 2010, but EM crushed US.

You mentioned staying the course, but you started a thread about wanting to dive into Australian equities based only on a century of backtesting - in other words, you were seeking to employ a very simplistic analysis and use it to change your portfolio fundamentally. I wonder if you might have an easier time staying the course during, say, a long US slump, if you held a truly more diversified portfolio. /2 cents

https://personal.vanguard.com/pdf/ISGVEMO.pdf
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Re: Enough. How do I invest in Australia.

Post by randomizer » Thu Aug 30, 2018 3:21 am

OP, if you want to eek out the last drop of risk-adjusted returns read a Larry Swedroe book on factor-based investing and another on alternative investments:
  • "Your Complete Guide to Factor-Based Investing: The Way Smart Money Invests Today" (Andrew L. Berkin, Larry E. Swedroe)
  • "Reducing the Risk of Black Swans: Using the Science of Investing to Capture Returns with Less Volatility", 2018 Edition (Larry Swedroe, Kevin Grogan)
What you are trying to do now is reinvent the wheel, and these it a good chance you're doing it badly.

(Disclaimer: I've read the books but I choose to have the simplest possible three-fund portfolio that I can construct.)
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Re: Enough. How do I invest in Australia.

Post by Jags4186 » Thu Aug 30, 2018 7:26 am

TomCat96 wrote:
Wed Aug 29, 2018 9:22 pm
I want to thank everyone here for the replies. They are quite illuminating. But in a sense, also disappointing.

One reason I don't invest in international stocks, is because VXUS, and its variants have underperformed for too long for too long. At this point 22 years.

Being situated in the United States, I find that some degree of burden has to be satisfied before I diversify internationally. I have my reasons, which I wont repeat here, but suffice it to say, there are certain qualities about a market that must be satisfied before I decide to allocate to it. The analysis is too complex for any one person to reason, so we turn to the evidence--the actual returns.

Australia was interesting to me. With respect to my portfolio, it would allow me to diversify my current position, without necessarily sacrificing on returns.

I say it is a little disappointing however because there does not seem to be an overt fund I can invest in, which would capture the benefits of that growth rate. Im looking for a practical step I can actually take.

It is ok for australia to be overly concentrated. Just because a single investment in Australia is in itself an overly concentrated bet, doesn't mean that diversifying into Australia would make my portfolio overly concentrated.

A 100% asset allocation in the US, assuming 10% a year CAGR nominal will have variance sigma²
Assuming Australia at 100% returns ~10% CAGR, what I hope to achieve is some allocation into australia, reducing the variance of my overall portfolio. Because returns are similar, my returns would not be compromised if the returns are sustained into the future. Similarly, because Australia is not the same as the US, I would expect less than a correlation of 1--which would inherently diversify my position.

It could be 90/10, 80/20, whatever.

With ~100 years of empirical results, that's the kind of evidence I am looking for.
It does not look like however I will be able to use what has been told here in the way I want.
You cannot replicate that past 118 years of performance with a fund, or even by buying every single individual stock listed on the Australian exchanges.

Companies go out of business, merge, or just get completely bought out. Tooheys was an Australian beer company that had been listed as a publicly traded Australian security since 1902. In 2009 it got bought by Kirin and is no longer listed on the Australian exchange. It is a Japanese company now listed on the Tokyo stock exchange. You can never get the returns of a company like Toohey’s going forward.

Also, please be cognizant that early outperformance followed by average performance can drastically skew the overall results. Jump over to Portfolio Visualizer and take a look at US Small Cap vs US Large Cap stocks. From 1972 - 2018 US Small Caps have returned double US Large Caps. But if we move the start date to 1984 US Large Caps have beat US Small Caps over the past 34 years. That would suggest to me that if you missed the 1970s your Small Cap position did not help your returns. Apply this to your Australia example and still see if it makes sense to invest with them. I’m not saying it doesn’t, I hold a larger small cap position in my portfolio, but I certainly know I can and likely will perform differently than the SP500 over my investment timeline.

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Re: Enough. How do I invest in Australia.

Post by TropikThunder » Thu Aug 30, 2018 1:21 pm

Jags4186 wrote:
Thu Aug 30, 2018 7:26 am
Also, please be cognizant that early outperformance followed by average performance can drastically skew the overall results. Jump over to Portfolio Visualizer and take a look at US Small Cap vs US Large Cap stocks. From 1972 - 2018 US Small Caps have returned double US Large Caps. But if we move the start date to 1984 US Large Caps have beat US Small Caps over the past 34 years. That would suggest to me that if you missed the 1970s your Small Cap position did not help your returns. Apply this to your Australia example and still see if it makes sense .
I’m glad you posted this since I was going to say something similar, but I didn’t have a specific example with numbers to back it up. To me, the whole point of being broadly diversified is that none of us knows which sector will outperform in the future. Knowing what did the best in the past does not bring anyone closer to knowing what will be the best going forward.

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Re: Enough. How do I invest in Australia.

Post by Jags4186 » Thu Aug 30, 2018 1:56 pm

also, this:

Image

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Re: Enough. How do I invest in Australia.

Post by heyyou » Fri Aug 31, 2018 3:10 pm

Deleted, not relevant.
Last edited by heyyou on Fri Aug 31, 2018 3:18 pm, edited 1 time in total.

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Re: Enough. How do I invest in Australia.

Post by LadyGeek » Fri Aug 31, 2018 3:16 pm

The wiki has some background info: Investing in Australia
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Re: Enough. How do I invest in Australia.

Post by roymeo » Fri Aug 31, 2018 3:27 pm

Someone made a claim about some asset class performing better for a broad enough range of time that it little resembles today's investing environment. I demand you provide me the tool to invest in this thing that the internet claim was made about. If that requires a time machine to create an investment tool for said asset class, get to building.


edit to add, rather than make a new post:
TomCat96 wrote:
Wed Aug 29, 2018 9:22 pm
I say it is a little disappointing however because there does not seem to be an overt fund I can invest in, which would capture the benefits of that growth rate. Im looking for a practical step I can actually take.
There doesn't seem to be an overt fund to invest in? Do you mean that you've decided that only a fund that has been around since 1900 could possibly capture the returns of the current Australian market?
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Re: Enough. How do I invest in Australia.

Post by HomerJ » Fri Aug 31, 2018 3:37 pm

JBTX wrote:
Thu Aug 16, 2018 8:57 pm
nisiprius wrote:
Thu Aug 16, 2018 5:37 pm
TomCat96 wrote:
Thu Aug 16, 2018 3:54 pm
...I'm not interested in claims that past performance doesn't guarantee future results...
That's not a "claim," that's a fact.
Evidence is evidence, and I'm ready to use it.
Evidence is evidence, and I'm ready to use the evidence that past performance doesn't guarantee future results.
Does anyone know what metrics were used to make this claim, and how I can incorporate Australian securities into my portfolio?
Eh, probably the Dimson & al. data from the book Triumph of the Optimists and the subsequent updates in the Credit Suisse Global Returns Yearbook series. Alas, they recently cut down on the number of countries they show you in the no-cost downloadable reports, but the one from 2016 still has Australia, I think.

One reason for thinking it's Dimson & al. is that you mentioned 1900, and that's when their data sets begin.

Download it here and look at page 38, Australia.

CAGR for Australian equities, 1900 through 2015, 6.7% real, compared to 6.4% for the US. I don't see that as terribly greed-inspiring, but that's probably the data people are referring to. I am not aware of any investments that attempt to duplicate the composition of the Dimson & al data, sorry. (My guess is that for the last few decades their data is just some obvious well-known index, and that it's only as you go back in time that the hardcore research begins.)

The country-to-country differences in Dimson & al. usually show an obvious influence from historical facts everyone knows about what happened to those countries during World War II. And then, too, countries whose stock markets vanished as a result of revolutions didn't do very well.

Image

Image


Looking at those graphs it appears perhaps all of the Australian out performance is due to the 1930s. Australia didn't take much of a hit during great depression. The US lost much more than 50% After that I suspect the returns are pretty similar.

Australia is somewhat of a natural resources commodities play and is probably more linked to the Chinese economy, for better or for worse.
Australia also was flat during 2000 instead of going down.

So it even has a recent example of not crashing when the U.S. did.

Seems legit. I'm not planning on investing in a single foreign country though.
Last edited by HomerJ on Fri Aug 31, 2018 3:43 pm, edited 1 time in total.
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Re: Enough. How do I invest in Australia.

Post by HomerJ » Fri Aug 31, 2018 3:40 pm

Jags4186 wrote:
Thu Aug 30, 2018 7:26 am
Tooheys was an Australian beer company that had been listed as a publicly traded Australian security since 1902. In 2009 it got bought by Kirin and is no longer listed on the Australian exchange. It is a Japanese company now listed on the Tokyo stock exchange. You can never get the returns of a company like Toohey’s going forward.
That's why Australia did better during the Depression. They weren't dumb enough to outlaw alcohol when everyone was depressed!
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Re: Enough. How do I invest in Australia.

Post by TimeRunner » Fri Aug 31, 2018 3:47 pm

These threads always remind me of the fun of walking through a dogs-off-leash area and tossing a tennis ball. Atta-boy! :D

To bring up a point so as not to be deleted, don't forget currency risk or hedging costs.
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Re: Enough. How do I invest in Australia.

Post by yaynick » Fri Aug 31, 2018 6:28 pm

AlohaJoe wrote:
Thu Aug 16, 2018 9:30 pm
  • That down decade was (relatively) mild (-4.6%; remember that a -5% loss requires (approximately) 10% gain to balance it out, so just a few points in losses make a big difference)
I do not think that is nearly true. Unless I am misunderstanding your point.

1 * (1 - 0.05) * (1 + 0.1) = 1.045 = 4.5% gain

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Re: Enough. How do I invest in Australia.

Post by LadyGeek » Fri Aug 31, 2018 7:13 pm

AlohaJoe wrote:
Thu Aug 16, 2018 9:30 pm
...Australia total historical performance is so good because:
  • Only one down decade in over a century (1970-1980)
  • That down decade was (relatively) mild (-4.6%; remember that a -5% loss requires (approximately) 10% gain to balance it out, so just a few points in losses make a big difference)
  • Consistently high real returns -- 7 of those 10 decades had over 8% real returns.
...
Please see this wiki page: Percentage gain and loss You may need to adjust your calculations. A 5% loss is much closer to requiring a 5% gain to get even.
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Re: Enough. How do I invest in Australia.

Post by One Ping » Fri Aug 31, 2018 7:25 pm

LadyGeek wrote:
Fri Aug 31, 2018 7:13 pm
A 5% loss is much closer to requiring a 5% gain to get even.
Right you are LadyGeek. 5.26% gain required to get back to even after a 5% loss.
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Re: Enough. How do I invest in Australia.

Post by AlohaJoe » Fri Aug 31, 2018 7:51 pm

yaynick wrote:
Fri Aug 31, 2018 6:28 pm
AlohaJoe wrote:
Thu Aug 16, 2018 9:30 pm
  • That down decade was (relatively) mild (-4.6%; remember that a -5% loss requires (approximately) 10% gain to balance it out, so just a few points in losses make a big difference)
I do not think that is nearly true. Unless I am misunderstanding your point.

1 * (1 - 0.05) * (1 + 0.1) = 1.045 = 4.5% gain
Indeed my recollection on geometric losses/gains was off by an order of magnitude, as others have helpfully pointed out :D

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Re: Enough. How do I invest in Australia.

Post by unclescrooge » Fri Aug 31, 2018 8:03 pm

nisiprius wrote:
Thu Aug 16, 2018 5:37 pm
TomCat96 wrote:
Thu Aug 16, 2018 3:54 pm
...I'm not interested in claims that past performance doesn't guarantee future results...
That's not a "claim," that's a fact.
Evidence is evidence, and I'm ready to use it.
Evidence is evidence, and I'm ready to use the evidence that past performance doesn't guarantee future results.
Does anyone know what metrics were used to make this claim, and how I can incorporate Australian securities into my portfolio?
Eh, probably the Dimson & al. data from the book Triumph of the Optimists and the subsequent updates in the Credit Suisse Global Returns Yearbook series. Alas, they recently cut down on the number of countries they show you in the no-cost downloadable reports, but the one from 2016 still has Australia, I think.

One reason for thinking it's Dimson & al. is that you mentioned 1900, and that's when their data sets begin.

Download it here and look at page 38, Australia.

CAGR for Australian equities, 1900 through 2015, 6.7% real, compared to 6.4% for the US. I don't see that as terribly greed-inspiring, but that's probably the data people are referring to. I am not aware of any investments that attempt to duplicate the composition of the Dimson & al data, sorry. (My guess is that for the last few decades their data is just some obvious well-known index, and that it's only as you go back in time that the hardcore research begins.)

The country-to-country differences in Dimson & al. usually show an obvious influence from historical facts everyone knows about what happened to those countries during World War II. And then, too, countries whose stock markets vanished as a result of revolutions didn't do very well.

Image

Image
Thanks for sharing.

If this is true and likely to continue, the marginal difference would be lost by the much higher ER of the index fund. :oops:

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Re: Enough. How do I invest in Australia.

Post by pkcrafter » Fri Aug 31, 2018 8:09 pm

Tom, here's a link to ETF information. I don't think your idea is out of the park, but you are not well diversified now and you won't be then. :happy

https://www.justetf.com/en/etf-profile. ... 00B5377D42

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Re: Enough. How do I invest in Australia. [as a US investor]

Post by LadyGeek » Fri Aug 31, 2018 8:22 pm

^^^ FYI - That link is for a German investor. I retitled the thread to clarify the OP is domiciled (living) in the US.

Australia is 2.4% of the world market. See the wiki: Category:Non-US domiciles

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