Dump international?

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Luckywon
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Dump international?

Post by Luckywon » Wed Apr 24, 2019 10:14 am

I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.

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UpsetRaptor
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Re: Dump international?

Post by UpsetRaptor » Wed Apr 24, 2019 10:16 am

Agree! International has been a drag on returns for a good century or two now.

Jags4186
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Re: Dump international?

Post by Jags4186 » Wed Apr 24, 2019 10:16 am

Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
The second you dump it will start the next international run up. If you believe in your plan then you need to stick with it.

Look what international did 2000-2009 vs US.

TaxingAccount
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Re: Dump international?

Post by TaxingAccount » Wed Apr 24, 2019 10:19 am

You should be increasing international not decreasing it. When the world dumps the dollar you'll be glad you have international.

bloom2708
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Re: Dump international?

Post by bloom2708 » Wed Apr 24, 2019 10:21 am

If you dump your international, that will mean it will have a good year. Helping all us who keep it. :o :wink:

That is how it works for me. Best course: Do Nothing!
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onourway
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Re: Dump international?

Post by onourway » Wed Apr 24, 2019 10:23 am

The point of diversifying investments has never been to maximize returns.

megabad
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Re: Dump international?

Post by megabad » Wed Apr 24, 2019 10:23 am

I think only you can determine whether holding international equities is right for you. However, it is my opinion that a recent period of underperformance is the worst reason for making this decision.

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ruralavalon
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Re: Dump international?

Post by ruralavalon » Wed Apr 24, 2019 10:34 am

Jags4186 wrote:
Wed Apr 24, 2019 10:16 am
Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
The second you dump it will start the next international run up. If you believe in your plan then you need to stick with it.

Look what international did 2000-2009 vs US.
+ 1, sometimes international stocks have outpaced domestic stocks.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

3funder
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Re: Dump international?

Post by 3funder » Wed Apr 24, 2019 10:46 am

Jags4186 wrote:
Wed Apr 24, 2019 10:16 am
Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
The second you dump it will start the next international run up. If you believe in your plan then you need to stick with it.

Look what international did 2000-2009 vs US.
+1.

AlohaJoe
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Re: Dump international?

Post by AlohaJoe » Wed Apr 24, 2019 10:50 am

onourway wrote:
Wed Apr 24, 2019 10:23 am
The point of diversifying investments has never been to maximize returns.
Yep. If you think international has done poorly, wait till you look at how your bonds have done!

Clearly you need to go 100% equities.

chevca
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Re: Dump international?

Post by chevca » Wed Apr 24, 2019 10:55 am

OP, if INT had a great year of 5 years, would you then want to buy back in? If not and you're just done with it, then dump it. If you would likely buy back in, keep it.

Your reasons for holding INT and other assets certainly weren't that all assets would be best and give max. returns each year, right? Have your reasons to hold different asset classes changed?

If we're just looking at the past 11 years, almost anything that isn't the S&P 500/total stock has been a drag on returns...

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Vulcan
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Re: Dump international?

Post by Vulcan » Wed Apr 24, 2019 10:57 am

VTWAX and done
If you torture the data long enough, it will confess to anything. ~Ronald Coase

TonyDAntonio
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Re: Dump international?

Post by TonyDAntonio » Wed Apr 24, 2019 11:00 am

It's another (sigh) rebalancing opportunity for us international holders. I just exchanged some VOO for DLS. (but I could have picked any of my international slice-and-dice ETFs to put money into)

Hold your nose and do the needful.

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Vulcan
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Re: Dump international?

Post by Vulcan » Wed Apr 24, 2019 11:03 am

TonyDAntonio wrote:
Wed Apr 24, 2019 11:00 am
It's another (sigh) rebalancing opportunity for us international holders.
No need to rebalance if your IPS calls for market cap.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

tea_pirate
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Re: Dump international?

Post by tea_pirate » Wed Apr 24, 2019 11:24 am

Disagree. 100% US investing is performance chasing rooted in an outdated, WWII-era US exceptionalism worldview.

The default Bogleheads equity holding should be a total world, market cap weighted stock index like VTWAX.

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leonidas
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Re: Dump international?

Post by leonidas » Wed Apr 24, 2019 11:27 am

Its been a disheartening ride with International for the last decade. I have been re-balancing into Intl seemly every year to keep my 30% foreign allocation. I am hopeful that this diversification will pay off so I am not planning any changes.

stocknoob4111
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Re: Dump international?

Post by stocknoob4111 » Wed Apr 24, 2019 11:31 am

I am tired of the underperformance as well. I have 20% International and it is seriously causing a huge drag on returns. However I have kept the allocation so far due to the "experts" from Fidelity, Schwab, Vanguard all predicting a rebound. Hopefully that pans out.

Today VXUS is down again another 1%. If valuations are so attractive then why are there no buyers? The sector just sinks further down. Infact, the NAV of VXUS today is lower than it was in August 2011. The returns have come only from the dividends.
Jags4186 wrote:
Wed Apr 24, 2019 10:16 am
Look what international did 2000-2009 vs US.
Small windows of outperformance are not enough to overcome large amount of underperformance most other times. If you take the aggregate returns over the last 35 years International has seriously underperformed domestic (10.26% CAGR for Total US Stock Market and 6.88% CAGR for ex-US). Why would you think 3 and a half decades is not significant enough of a dataset and why would one assume that the next 3 decades are going to be radically different for International than the past?
TaxingAccount wrote:
Wed Apr 24, 2019 10:19 am
You should be increasing international not decreasing it. When the world dumps the dollar you'll be glad you have international.
They have been saying this for the last 20 years.. the world is not going to dump the dollar because there are no better alternatives. All the other currencies (and their corresponding economies) have way worse problems than the $. People were also saying the yuan will become the reserve currency.. what a joke.. does anyone believe the currency of a Communist state is going to be adopted as such? Nonsense.

H-Town
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Re: Dump international?

Post by H-Town » Wed Apr 24, 2019 11:35 am

Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
You're selling high. I'll be glad buying low from you.

TaxingAccount
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Re: Dump international?

Post by TaxingAccount » Wed Apr 24, 2019 11:43 am

H-Town wrote:
Wed Apr 24, 2019 11:35 am
Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
You're selling high. I'll be glad buying low from you.
i agree you would be left holding the bag for the guy in the schwab commercial who has a really good trade idea and wakes up in the middle of the night

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climber2020
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Re: Dump international?

Post by climber2020 » Wed Apr 24, 2019 11:44 am

I would love to hear from all the "should I invest in US stocks at an all time high" people and see if they're piling all their extra cash into international since it has been underperforming for many years.

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whodidntante
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Re: Dump international?

Post by whodidntante » Wed Apr 24, 2019 11:48 am

At 15% going to 7.5%, it really doesn't matter what you do. Dump away, if it makes you feel smart. Methinks you've already decided.

visualguy
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Re: Dump international?

Post by visualguy » Wed Apr 24, 2019 11:57 am

It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.

Tamalak
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Re: Dump international?

Post by Tamalak » Wed Apr 24, 2019 11:59 am

Today: International down 1%, US flat
Yesterday: International flat, US up 1%

This is just miserable lmao. I'm going to stick to my 50/50 allocation, but how many decades in a row can this go on if the markets are anywhere near efficient?

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UpsetRaptor
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Re: Dump international?

Post by UpsetRaptor » Wed Apr 24, 2019 12:08 pm

Tamalak wrote:
Wed Apr 24, 2019 11:59 am
Today: International down 1%, US flat
Yesterday: International flat, US up 1%

This is just miserable lmao. I'm going to stick to my 50/50 allocation, but how many decades in a row can this go on if the markets are anywhere near efficient?
How many decades could it go on? England/Britain outperformed for probably about 3 centuries, from somewhere around the Spanish armada defeat until the late 19th century. Rome probably outperformed for about half a millennium. US has probably been outperforming for about a century and a half now, starting sometime in the post Civil War era. So it could continue to outperform for centuries. Or it could underperform starting today.

rgs92
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Re: Dump international?

Post by rgs92 » Wed Apr 24, 2019 12:10 pm

The dollar had a long-term slump. That MAY be over and it certainly is plausible that it has stabilized for quite a while. So that would help international.

bogledogle87
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Re: Dump international?

Post by bogledogle87 » Wed Apr 24, 2019 12:15 pm

visualguy wrote:
Wed Apr 24, 2019 11:57 am
It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.
Or is the US extremely overpriced and International undervalued? I have no idea and neither does anyone else. VTWAX covers it all
VTWAX and chill

bogledogle87
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Re: Dump international?

Post by bogledogle87 » Wed Apr 24, 2019 12:18 pm

UpsetRaptor wrote:
Wed Apr 24, 2019 12:08 pm
Tamalak wrote:
Wed Apr 24, 2019 11:59 am
Today: International down 1%, US flat
Yesterday: International flat, US up 1%

This is just miserable lmao. I'm going to stick to my 50/50 allocation, but how many decades in a row can this go on if the markets are anywhere near efficient?
How many decades could it go on? England/Britain outperformed for probably about 3 centuries, from somewhere around the Spanish armada defeat until the late 19th century. Rome probably outperformed for about half a millennium. US has probably been outperforming for about a century and a half now, starting sometime in the post Civil War era. So it could continue to outperform for centuries. Or it could underperform starting today.
Total World Index (VTWAX) should be strongly considered the default equities holding unless you are supremely confident you could have predicted the outcome of any significant timeframe in the graph below and are sure you can extrapolate it for the future.

1900-2017 via Credit Suisse
Image
VTWAX and chill

H-Town
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Re: Dump international?

Post by H-Town » Wed Apr 24, 2019 12:20 pm

visualguy wrote:
Wed Apr 24, 2019 11:57 am
It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.
Your "long run" sounds like it's cherry picking 2010 - 2019 period.

lostdog
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Re: Dump international?

Post by lostdog » Wed Apr 24, 2019 12:24 pm

tea_pirate wrote:
Wed Apr 24, 2019 11:24 am
Disagree. 100% US investing is performance chasing rooted in an outdated, WWII-era US exceptionalism worldview.

The default Bogleheads equity holding should be a total world, market cap weighted stock index like VTWAX.

+1000
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

lostdog
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Re: Dump international?

Post by lostdog » Wed Apr 24, 2019 12:26 pm

Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
Recency bias is a tough one. If you do sell, I would like to thank you for allowing me to buy low. Since your name contains "Lucky", you might get lucky with your U.S. only BET.
Last edited by lostdog on Wed Apr 24, 2019 12:31 pm, edited 1 time in total.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

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fortfun
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Re: Dump international?

Post by fortfun » Wed Apr 24, 2019 12:28 pm

Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
When it comes to investing, I seem to be better doing the opposite of whatever I think I should do, sadly. I had been doing after tax investing last fall and was getting tired of seeing my money evaporate and decided to stop contributing mid December. Boy was that dumb.

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TheTimeLord
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Re: Dump international?

Post by TheTimeLord » Wed Apr 24, 2019 12:29 pm

bogledogle87 wrote:
Wed Apr 24, 2019 12:18 pm

Total World Index (VTWAX) should be strongly considered the default equities holding unless you are supremely confident you could have predicted the outcome of any significant timeframe in the graph below and are sure you can extrapolate it for the future.

1900-2017 via Credit Suisse
Image
The only thing that appears to have eaten in the share U.S. significantly was Japan around 1990 (LOL).
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

lostdog
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Re: Dump international?

Post by lostdog » Wed Apr 24, 2019 12:29 pm

visualguy wrote:
Wed Apr 24, 2019 11:57 am
It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.
Please stay out so I can buy low. When it starts outperforming, and it will, I'll be laughing to the bank.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

Seasonal
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Re: Dump international?

Post by Seasonal » Wed Apr 24, 2019 12:31 pm

megabad wrote:
Wed Apr 24, 2019 10:23 am
I think only you can determine whether holding international equities is right for you. However, it is my opinion that a recent period of underperformance is the worst reason for making this decision.
Exactly! There are a lot of posts here about changing allocations that almost all appear to be rationalizations for performance chasing.

visualguy
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Re: Dump international?

Post by visualguy » Wed Apr 24, 2019 12:37 pm

H-Town wrote:
Wed Apr 24, 2019 12:20 pm
visualguy wrote:
Wed Apr 24, 2019 11:57 am
It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.
Your "long run" sounds like it's cherry picking 2010 - 2019 period.
Why does it sound like that to you? How about the last 30 years, or 50 years, or 100 years? Is that long enough? Poor performance for the ex-US index during all of these as shown in numerous other threads on this topic. Low return coupled with high volatility. Also, higher costs, foreign taxes, and the risk of currency fluctuations are disadvantages.

grettman
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Re: Dump international?

Post by grettman » Wed Apr 24, 2019 12:38 pm

I have money in the I Fund in my TSP.

I have come to realize that International just plain sucks.

But that is where I have some of my money and I am not going to move it.

If I need that money down the road to avoid eating cat food, I will sell.

Until that time comes, it will sit there and just be a drag (slight drag) on my returns.

lostdog
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Re: Dump international?

Post by lostdog » Wed Apr 24, 2019 12:39 pm

visualguy wrote:
Wed Apr 24, 2019 12:37 pm
H-Town wrote:
Wed Apr 24, 2019 12:20 pm
visualguy wrote:
Wed Apr 24, 2019 11:57 am
It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.
Your "long run" sounds like it's cherry picking 2010 - 2019 period.
Why does it sound like that to you? How about the last 30 years, or 50 years, or 100 years? Is that long enough? Poor performance for the ex-US index during all of these as shown in numerous other threads on this topic. Low return coupled with high volatility. Also, higher costs, foreign taxes, and the risk of currency fluctuations are disadvantages.
It sounds to me you're a performance chaser.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

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mrspock
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Re: Dump international?

Post by mrspock » Wed Apr 24, 2019 12:40 pm

Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
Dump them. I’m bonds plus US equity, the water is fine. Use bonds w/ AA for volatility control not international equities IMO.

For the International bulls: exactly how many decades of unlikely levels of outperformance will it take to you be proven right (catching up to the US-only folks)? 1? 2 now? Pass.

There’s a simple reason they have low PEs: they are simply worth less (taxes, political climates, volatility, earnings history etc). Check out the “Money for the rest of us” podcast on this topic (episode 209), he breaks it down quite well. Or you can take the advice of Bogle himself or Buffet, both have spoken at length on this topic.
Last edited by mrspock on Wed Apr 24, 2019 12:45 pm, edited 1 time in total.

bogledogle87
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Re: Dump international?

Post by bogledogle87 » Wed Apr 24, 2019 12:42 pm

TheTimeLord wrote:
Wed Apr 24, 2019 12:29 pm
bogledogle87 wrote:
Wed Apr 24, 2019 12:18 pm

Total World Index (VTWAX) should be strongly considered the default equities holding unless you are supremely confident you could have predicted the outcome of any significant timeframe in the graph below and are sure you can extrapolate it for the future.

1900-2017 via Credit Suisse
Image
The only thing that appears to have eaten in the share U.S. significantly was Japan around 1990 (LOL).
Sounds like you've got it all figured out - I wish I could say the same thing. Take a closer look at 1970-1990 though at the US. Surely Japan's success during that period was not the only factor causing the US cap to be cut by more than half.

Out of curiosity - Where do you think the US goes from here? 70% like in the 1960's? Or maybe blow past that and sail away to 80-90% of the world cap - That would be quite impressive! I'm not willing to bet on that expectation, though.
VTWAX and chill

stocknoob4111
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Re: Dump international?

Post by stocknoob4111 » Wed Apr 24, 2019 12:42 pm

lostdog wrote:
Wed Apr 24, 2019 12:26 pm
Recency bias is a tough one. If you do sell, I would like to thank you for allowing me to buy low. Since your name contains "Lucky", you might get lucky with your U.S. only BET.
35 years of past data isn't "Recency bias". If you read my post above I stated that International has had a CAGR almost 4% under US over 35 years. I am highly skeptical that there is going to be some kind of radical paradigm shift that the next 3 decades are going to be superior to the US. On the contrary it looks like a lot of the ex-US developed world is facing even worse headwinds that the US and EM is in a bad position with regard to all the dollar denominated debt burdens in conjunction with slowing growth.

I'm still holding onto 20% Intl. just in case I am wrong in my thesis but I would not increase it more than this.

visualguy
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Re: Dump international?

Post by visualguy » Wed Apr 24, 2019 12:46 pm

lostdog wrote:
Wed Apr 24, 2019 12:29 pm
visualguy wrote:
Wed Apr 24, 2019 11:57 am
It's important not to try to time it and keep getting in and out. I would just get out of ex-US and stay out. This index has not shown itself to be a viable investment on the long run.
Please stay out so I can buy low. When it starts outperforming, and it will, I'll be laughing to the bank.
It's not even low. Ex-US valuations are significantly higher than their historical averages even though the index has gone mostly nowhere, so laughter on the way to the bank is quite unlikely, unfortunately

lostdog
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Re: Dump international?

Post by lostdog » Wed Apr 24, 2019 12:46 pm

mrspock wrote:
Wed Apr 24, 2019 12:40 pm
Luckywon wrote:
Wed Apr 24, 2019 10:14 am
I have maintained a 15% allocation to International equities for about 11 years now and it has been an appalling drag on my returns. Looking at some charts now, VXUS has underperformed VTI by approximately 50% over the last five years, and 15 % over the past 12 months. I am thinking strongly of throwing in the towel for international in my retirement accounts (about half of my international holdings), converting to domestic equities. Would be interested to hear from others who agree or disagree with this move.
Dump them. I’m bonds plus US equity, the water is fine. Use bonds w/ AA for volatility control not international equities IMO.

For the International bulls: exactly how many decades of unlikely levels of outperformance will it take to you be proven right (catching up to the US-only folks)? 1? 2 now? Pass.

There’s a simple reason they have low PEs: they are simply worth less (taxes, political climates, volatility, earnings history etc). Check out the “Money for the rest of us” podcast on this topic, he breaks it down quite well.
Can I borrow your crystal ball? Heck, I might as well hand over all of my money to you. If you're pretty good at this stuff I'm sure you can figure out which sectors in your U.S. index will outperform.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

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TheTimeLord
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Re: Dump international?

Post by TheTimeLord » Wed Apr 24, 2019 12:48 pm

bogledogle87 wrote:
Wed Apr 24, 2019 12:42 pm
TheTimeLord wrote:
Wed Apr 24, 2019 12:29 pm
bogledogle87 wrote:
Wed Apr 24, 2019 12:18 pm

Total World Index (VTWAX) should be strongly considered the default equities holding unless you are supremely confident you could have predicted the outcome of any significant timeframe in the graph below and are sure you can extrapolate it for the future.

1900-2017 via Credit Suisse
Image
The only thing that appears to have eaten in the share U.S. significantly was Japan around 1990 (LOL).
Sounds like you've got it all figured out - I wish I could say the same thing. Take a closer look at 1970-1990 though at the US. Surely Japan's success during that period was not the only factor causing the US cap to be cut by more than half.

Out of curiosity - Where do you think the US goes from here? 70% like in the 1960's? Or maybe blow past that and sail away to 80-90% of the world cap - That would be quite impressive! I'm not willing to bet on that expectation, though.
From my perspective I have trouble not overweighting the U.S. as long as it is the most successful consumer based economy in the world. There are specific countries I would definitely invest in outside the U.S.long term but large areas of the world I want no part of. I also still believe the U.S. has the best regulated, most liquid markets in the world. Bottom line I see nothing flawed currently about the recommendations from Buffet and Bogle but that could change over time. If you believe in World Cap then follow that strategy.
Last edited by TheTimeLord on Wed Apr 24, 2019 12:50 pm, edited 1 time in total.
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deltaneutral83
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Re: Dump international?

Post by deltaneutral83 » Wed Apr 24, 2019 12:49 pm

I'm not even sure having 15% in the first place was really doing anything. I've never understood the core 3F of VTI/VXUS/BND and delegating any of the three under 20%. What do the TDF's get out of a young person in a TDF with 10% bonds, what's that really doing? 0 or 20+ makes sense depending upon your risk tolerance, age, life, yada yada yada. Same thing with International, I don't see what you'd be between 0-19.9999%?

lostdog
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Re: Dump international?

Post by lostdog » Wed Apr 24, 2019 12:53 pm

I'm starting to question why I'm even on this board. If I was a young investor there would be a really good chance I would make a mistake going U.S. only.

Thank you Vanguard and other institutions for promoting international investing. Taking advice from performance chasers, old school and out dated ideologies can be bad for a young investor.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

bogledogle87
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Re: Dump international?

Post by bogledogle87 » Wed Apr 24, 2019 1:00 pm

TheTimeLord wrote:
Wed Apr 24, 2019 12:48 pm

From my perspective I have trouble not overweighting the U.S. as long as it is the most successful consumer based economy in the world. There are specific countries I would definitely invest in outside the U.S.long term but large areas of the world I want no part of. I also still believe the U.S. has the best regulated, most liquid markets in the world. Bottom line I see nothing flawed currently about the recommendations from Buffet and Bogle but that could change over time.
Fair points and no arguments on the advantages with regulations, but it's very easy forget to consider what is already priced in. Most Investors know everything you just stated and those factors contribute mightily to the current valuations. This is not to say there aren't still inefficiencies, but companies and even countries can have excellent fundamentals, and still be overvalued. So what happens next? This is where it becomes extremely difficult to set expectations on the future performance at current prices. Dotcom stocks were looking like a pretty smart bet and worthy of significant overweight in the late 90's, until they weren't.
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TheTimeLord
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Re: Dump international?

Post by TheTimeLord » Wed Apr 24, 2019 1:06 pm

bogledogle87 wrote:
Wed Apr 24, 2019 1:00 pm
TheTimeLord wrote:
Wed Apr 24, 2019 12:48 pm

From my perspective I have trouble not overweighting the U.S. as long as it is the most successful consumer based economy in the world. There are specific countries I would definitely invest in outside the U.S.long term but large areas of the world I want no part of. I also still believe the U.S. has the best regulated, most liquid markets in the world. Bottom line I see nothing flawed currently about the recommendations from Buffet and Bogle but that could change over time.
Fair points and no arguments on the advantages with regulations, but it's very easy forget to consider what is already priced in. Most Investors know everything you just stated and those factors contribute mightily to the current valuations. This is not to say there aren't still inefficiencies, but companies and even countries can have excellent fundamentals, and still be overvalued. So what happens next? This is where it becomes extremely difficult to set expectations on the future performance at current prices. Dotcom stocks were looking like a pretty smart bet and worthy of significant overweight in the late 90's, until they weren't.
Here is a question, over the long term do you expect owning International to enhance results or primarily smooth out volatility?
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monkey_business
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Re: Dump international?

Post by monkey_business » Wed Apr 24, 2019 1:07 pm

Question for those advocating against international: Do you also advocate against domestic large caps?

Historically, small caps have outperformed large caps:

https://www.bogleheads.org/wiki/Histori ... ed_returns

Why not go all the way, dump all these portfolio anchors, and just invest in small caps?

DonIce
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Re: Dump international?

Post by DonIce » Wed Apr 24, 2019 1:19 pm

stocknoob4111 wrote:
Wed Apr 24, 2019 12:42 pm
35 years of past data isn't "Recency bias". If you read my post above I stated that International has had a CAGR almost 4% under US over 35 years. I am highly skeptical that there is going to be some kind of radical paradigm shift that the next 3 decades are going to be superior to the US. On the contrary it looks like a lot of the ex-US developed world is facing even worse headwinds that the US and EM is in a bad position with regard to all the dollar denominated debt burdens in conjunction with slowing growth.
It seems unlikely to me that the US will return to 60% or more of world market cap. So many other nations are catching up so quickly in so many ways. That means that total international markets will at least keep pace with US markets over the next few decades. Furthermore, I don't know how people expect that a country that has 5% of the world's population having more than 50% of the world's market cap is a situation that they expect to continue indefinitely into the future. Yes, the US has a business friendly political and social system, strong institutions and rule of law, and is home to many of the world's most successful corporations. But 10x more market cap per capita compared to the rest of the world lasting forever? The US may be "better", but it's not guaranteed to forever be 10x better.

By the way, the market cap chart posted above clearly shows that the US has underperformed since its peak in the late 60s when it had about 2/3 of world market cap. Measurements over the last 30 or 35 years, which you claim are not "recency bias", are in fact selected specifically from the point in time when the US was at its very momentary bottom (as a fraction of world market cap) in the mid-late 80s. Anyone who says that international underperformed over the last 30 years is just saying that the Japanese stock bubble collapsed (which we all know) since 30 years ago Japan was more than half of all non-US market cap. Try taking 50 years instead of 35 and you'll see that total international has significantly outperformed US only.

I'll go out on a limb with my crystal ball and predict that US stock market cap will be down to 30% of world stock market cap by 2050. If so, that means total international will outperform US by about 2.3% annualized over the next 30 years.
Last edited by DonIce on Wed Apr 24, 2019 1:25 pm, edited 2 times in total.

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TheTimeLord
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Re: Dump international?

Post by TheTimeLord » Wed Apr 24, 2019 1:23 pm

monkey_business wrote:
Wed Apr 24, 2019 1:07 pm
Question for those advocating against international: Do you also advocate against domestic large caps?

Historically, small caps have outperformed large caps:

https://www.bogleheads.org/wiki/Histori ... ed_returns

Why not go all the way, dump all these portfolio anchors, and just invest in small caps?
I can only answer for myself, I do not have any small cap slant. But then again performance per se is not why I currently don't hold any International (I have in the past). I don't hold any International currently because I don't see a purpose in it and in general I see it as a catch up trade. That said there are 3 or 4 countries I might start building positions in using ETFs going forward.I find no fault with believing in a World Cap strategy, it just isn't the strategy I currently have implemented. As for the OP question, I would not dump your International because constantly changing strategies usually does not turn out well and 15% is not a huge portion of your portfolio. If you have to stretch your itch dump 5% and keep the other 10%.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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