VTIAX International fund - should I give up on it?

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frcabot
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Re: VTIAX International fund - should I give up on it?

Post by frcabot »

Op is in his 80s and has a short time frame, I think he’d be well within his rights to withdraw from international equities. I personally think international (and especially EM like China) will outperform US in the next decade and I’m comfortable with a sizeable allocation to VWO. If I’m wrong, oh well, I’m only putting in enough that I’ll still be ok I lose what I put into it.

Many smart analysts think international equities are going to outperform relative to US equities for the next decade as tech valuations start coming back to earth, and as quality of life continues improving ex-US. Ultimately, it’s the same in EU as it is in US and anywhere else: less unemployment = better conditions and higher pay = more disposable income = more buyers and clients and more investors supporting companies in their countries = higher equity prices. The European middle class, just like the US middle class, is having a tough go of things at the moment but that won’t last forever.
typical.investor
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Re: VTIAX International fund - should I give up on it?

Post by typical.investor »

frcabot wrote: Sat Sep 21, 2019 1:18 am Op is in his 80s and has a short time frame, I think he’d be well within his rights to withdraw from international equities. I personally think international (and especially EM like China) will outperform US in the next decade and I’m comfortable with a sizeable allocation to VWO. If I’m wrong, oh well, I’m only putting in enough that I’ll still be ok I lose what I put into it.

Many smart analysts think international equities are going to outperform relative to US equities for the next decade as tech valuations start coming back to earth, and as quality of life continues improving ex-US. Ultimately, it’s the same in EU as it is in US and anywhere else: less unemployment = better conditions and higher pay = more disposable income = more buyers and clients and more investors supporting companies in their countries = higher equity prices. The European middle class, just like the US middle class, is having a tough go of things at the moment but that won’t last forever.
How do you know the OP is 80?
typical.investor
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Re: VTIAX International fund - should I give up on it?

Post by typical.investor »

Elysium wrote: Fri Sep 20, 2019 9:29 pm
bluquark wrote: Fri Sep 20, 2019 9:09 pm
Elysium wrote: Fri Sep 20, 2019 9:04 pmEspecially with EM this is a problem where many currencies are constantly weakening against USD.
And how do you know this is bad? Maybe currency weakening will even cause more profit for companies operating in EM, because their exports will be more competitive? Or maybe the average company in EM are heavily indebted and a weakening currency would reduce the burden? Look at the chart I posted -- in Canada historically currency weakening has been a big winner for equities, in Europe it has usually been a loser, but in most countries at most times it has been a wash.

Very little of the market cap of companies in a given market is in the form of cash or fixed income in the local currency, so it's not clear to me that investing in foreign equities actually takes on a notable amount of "currency risk". In fact, until recently you would have been taking on more foreign currency risk by holding US tech company stock, because they held giant piles of Euros in their foreign subsidiaries waiting for a tax break to repatriate.
Jack Bogle has studied this issue very deeply, and here is his answer from one of the many interviews he has given on this subject.

Q. For a long time, you've recommended against owning international stocks. Your argument states that one has substantial international exposure from owning U.S. stocks and you don't pick up the foreign currency risk. But doesn't the large performance differential between total U.S. and total international stocks over the past 10 years, as well as currency fluctuations not correlated with U.S. stock performance, argue for owning international stocks directly?

A. Let me be clear, I have never argued against owning international stocks. I just don't think one should have more than 20% of their equity portfolio in international stocks. International stocks are dominated by the U.K., France and Japan, which have large problems.

Of course, these problems are known by investors, but international stocks have additional sovereign risks and far less shareholder protection than in the U.S. Thus, international investing is riskier, and I don't think planners should put more than 20% of their client's equity exposure in international stocks.
Jack Bogle isn't around to comment on the US political system anymore. Quite frankly, I'd have a few things to say to him if he tried to make that argument today.
goblue100
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Re: VTIAX International fund - should I give up on it?

Post by goblue100 »

typical.investor wrote: Sat Sep 21, 2019 1:32 am
How do you know the OP is 80?
Yes, Op started the thread but I don't believe has posted since. Poster Munir disclosed his/her age as 80 on page 1.
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lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

am wrote: Fri Sep 20, 2019 1:19 pm
asif408 wrote: Fri Sep 20, 2019 12:25 pm
stocknoob4111 wrote: Fri Sep 20, 2019 12:06 pm
am wrote: Fri Sep 20, 2019 8:43 am Is this cherry picking a starting point? What does this tell us? Don’t invest in international? I think it’s best to diversify outside US because you don’t know what the next 30 years will be like.
It is cherry picking no doubt... but the only way to make sense of it is to compare the same sets of rolling 10 or 20 year periods. I want to see how many rolling 10 and 20 year periods there were in which International outperformed US and what was the positive divergence.
EAFE data only goes back to 1969 or 1970, but here is a summary:

1970s, 1980s, 2000s: EAFE outperformed US
1990, 2010s: US outperformed EAFE

You can find historical data and do the rolling year returns yourself, since I'm too lazy to do it. The bottom line is the outperformance tends to be clustered so most of the rolling periods that include the 1970s and 1980s will make EAFE look better, and most of the rolling periods that include the late 1990s and the current decade will make the US look better. If you read Peter Bernstein's "Against the Gods" book, which was published in 1994, the returns of EAFE were about 3% higher from 1970 to 1994, something like 14% vs 11%. So anyone looking back in 1994 or 1995 and deciding that holding US stocks was pointless and they could get indirect exposure to the US because overseas companies did business and who wants to take the currency risk of a falling dollar in the US missed out. The opposite could potentially be said today, because looking at the 25 year period of 1994-2019 shows dramatic outperformance by the US.

Meb Faber points out that the US has rarely been the best performing country by decade, and has underperformed an equal weighting of investable countries in 8 of the past 12 decades: https://twitter.com/MebFaber/status/1120391366096433153. It just so happens that 2 of those 4 occurred in the last 3 decades.
Thanks for the data. Have to constantly remind myself of stay the course with my 40% international. You’d think sometimes this forum was about market timing, recently bias, and the latest hot investment.
It is for most of the U.S. only investors here. Emotion, ideologies(political and personal), investing in the rear view mirror and predicting the future play a big role for them.

Buying the haystack, keeping emotions, biases and ideologies out of it is the way to go. It's good for novice investors to see both sides.

Most investors are better off with a Target date fund or life strategy fund. If they split up funds might start getting corrupted by this group, start tinkering and sabatoging their plan.
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ruralavalon
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Re: VTIAX International fund - should I give up on it?

Post by ruralavalon »

lostdog wrote: Sat Sep 21, 2019 8:31 amIt is for most of the U.S. only investors here. Emotion, ideologies(political and personal), investing in the rear view mirror and predicting the future play a big role for them.
Most of that applies also to world market weight advocates as well. They believe in some version of the efficient market hypothesis (there's are several versions), which based on analysis of historical events proposes that the market rapidly incorporates new information into stock prices.

Look up the meaning of the word "hypothesis" .

So for world market weight advocates it's also an act of faith based on a rear view mirror and a prediction about the future.
Last edited by ruralavalon on Sat Sep 21, 2019 9:24 am, edited 1 time in total.
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typical.investor
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Re: VTIAX International fund - should I give up on it?

Post by typical.investor »

goblue100 wrote: Sat Sep 21, 2019 8:29 am
typical.investor wrote: Sat Sep 21, 2019 1:32 am
How do you know the OP is 80?
Yes, Op started the thread but I don't believe has posted since. Poster Munir disclosed his/her age as 80 on page 1.
I see. Sleight of hand to make Munir the OP. They aren’t the same hence my confusion.

The OP was under 40 I think.

Anyway, are we advising people to sell out underperforming assets as we age now? Expected returns are often wrong, but international over the next decade is predicted to do better.

Munir will be around at least that long. Am pretty sure of it!
Last edited by typical.investor on Sat Sep 21, 2019 9:17 am, edited 1 time in total.
lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

OP,

Here is a great article from Jonathan Clements regarding diversification.

https://humbledollar.com/2019/09/timely-reminder/

"Over the 10 years through August 2009, the large-cap stocks in the S&P 500 shed an average 0.8% a year, even with dividends included. Meanwhile, U.S. value stocks beat U.S growth stocks, smaller-cap U.S. shares notched 5.5% a year, developed foreign stock markets 2.7% and emerging markets 10.4%.

Fast forward one decade, and the leaders have become laggards and vice versa. Over the 10 years through August 2019, the S&P 500 skyrocketed 13.5% a year, smaller U.S. stocks 12.7%, developed foreign markets 5% and emerging markets 4.1%. And—just to complete the role reversal—U.S. growth stocks have handily outpaced U.S. value.

What does the next decade hold? Beats me. It’s why I favor owning a globally diversified stock portfolio—and why I cringe when I hear investors say that value investing is dead, or they own only U.S. stocks, or bonds don’t make sense at today’s yields, or emerging markets are too risky.

Indeed, I’m baffled by the confidence of these investors, which seems to rest largely or entirely on taking the immediate past and extrapolating it into the future. By contrast, I’ve been at this for 34 years, and my confidence in investment predictions—whether they’re mine or somebody else’s—has never been lower. It took a few decades, but any sense of prescience I once had has now been thoroughly vanquished by countless failed forecasts. We may only have one past, but there are all kinds of possible futures, and I have no clue which one we’re going to get."
frcabot
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Re: VTIAX International fund - should I give up on it?

Post by frcabot »

goblue100 wrote: Sat Sep 21, 2019 8:29 am
typical.investor wrote: Sat Sep 21, 2019 1:32 am
How do you know the OP is 80?
Yes, Op started the thread but I don't believe has posted since. Poster Munir disclosed his/her age as 80 on page 1.
Whoops, sorry.
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steve roy
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Re: VTIAX International fund - should I give up on it?

Post by steve roy »

I think it’s desirable to have SOME international, because as Roger Miller has told us:

“Everything changes a little and it should

Good ain’t forever and Bad ain’t for good.”
bikechuck
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Re: VTIAX International fund - should I give up on it?

Post by bikechuck »

owenmia wrote: Tue Aug 27, 2019 9:11 am
Munir wrote: Mon Aug 26, 2019 5:32 pm
tomjonesrocks wrote: Mon Aug 26, 2019 3:41 pm Like many, I have an international fund in my portfolio for diversification. Unfortunately, it seems like this play does nothing but consistently bring the rest of my portfolio down.

What are your thoughts on VTIAX? After recent event it's pretty much given back all gains for the year and it seems like it's going to be continually hit in this climate. I just don't see how it's got any chance at sustained momentum.

Opinions appreciated - very frustrated owner of this fund...
I sold it today- for the same reasons you stated. I know all the rational reasons for international diversification but I am tired of seeing it going down and my timeline is not long. Should not have purchased it in the first place but was following the advice of the Vanguard advisers which is probably correct for those with longer timelines. Very un-Boglehead action on my part- Mea Culpa.
What is your timeline, just out of curiosity?
By timeline do you mean expiration date or retirement date? I figure there is a risk that I could live 25 years or so in retirement which began two years ago and I will need to be invested throughout. So I think of my "timeline" as my probable/possible expiration date.
am
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Re: VTIAX International fund - should I give up on it?

Post by am »

lostdog wrote: Sat Sep 21, 2019 9:17 am OP,

Here is a great article from Jonathan Clements regarding diversification.

https://humbledollar.com/2019/09/timely-reminder/

"Over the 10 years through August 2009, the large-cap stocks in the S&P 500 shed an average 0.8% a year, even with dividends included. Meanwhile, U.S. value stocks beat U.S growth stocks, smaller-cap U.S. shares notched 5.5% a year, developed foreign stock markets 2.7% and emerging markets 10.4%.

Fast forward one decade, and the leaders have become laggards and vice versa. Over the 10 years through August 2019, the S&P 500 skyrocketed 13.5% a year, smaller U.S. stocks 12.7%, developed foreign markets 5% and emerging markets 4.1%. And—just to complete the role reversal—U.S. growth stocks have handily outpaced U.S. value.

What does the next decade hold? Beats me. It’s why I favor owning a globally diversified stock portfolio—and why I cringe when I hear investors say that value investing is dead, or they own only U.S. stocks, or bonds don’t make sense at today’s yields, or emerging markets are too risky.

Indeed, I’m baffled by the confidence of these investors, which seems to rest largely or entirely on taking the immediate past and extrapolating it into the future. By contrast, I’ve been at this for 34 years, and my confidence in investment predictions—whether they’re mine or somebody else’s—has never been lower. It took a few decades, but any sense of prescience I once had has now been thoroughly vanquished by countless failed forecasts. We may only have one past, but there are all kinds of possible futures, and I have no clue which one we’re going to get."
+ 1,000,000

If I’ve learned anything, it’s that no one can accurately predict the future and what will happen in markets. And here we have people taking past returns and forecasting the future, using cherry picked periods. I hope none of the less experienced readers get the wrong message. After all these years on this forum, it’s hard to believe how much performance chasing there is on this forum. Like they say, investing is simple but not easy.
stocknoob4111
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Re: VTIAX International fund - should I give up on it?

Post by stocknoob4111 »

The performance in aggregate is what matters, not just number of decades of outperformance... last 30 years in aggregate holding International has lowered Portfolio performance substantially, that isn't conjecture, it's historical fact. When the US has outperformed, it has outperformed by a huge margin, when it has underperformed it's by a smaller margin. In addition, Europe, Japan and EM are a geopolitical circus. We have our own issues but compared to what's going on there what's happening here in the US is tame. The situation in Europe particularly isn't very confidence inspiring.

For buy and hold investors such as myself this is concerning, I don't intend to sell my International holdings for at least 30 years from now... so that begs the question - should we ignore the historical evidence? Because the long term historical averages say International does not perform.
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vineviz
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Re: VTIAX International fund - should I give up on it?

Post by vineviz »

stocknoob4111 wrote: Sat Sep 21, 2019 5:28 pm For buy and hold investors such as myself this is concerning, I don't intend to sell my International holdings for at least 30 years from now... so that begs the question - should we ignore the historical evidence? Because the long term historical averages say International does not perform.
It’s much better to look dispassionately at ALL the evidence, not just the pieces that suit whatever preconceived notions one might have. Otherwise you end up twisting the facts to support your biases.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: VTIAX International fund - should I give up on it?

Post by stocknoob4111 »

vineviz wrote: Sat Sep 21, 2019 5:47 pm It’s much better to look dispassionately at ALL the evidence, not just the pieces that suit whatever preconceived notions one might have. Otherwise you end up twisting the facts to support your biases.
Which is why I would really like to see rolling 30 year periods and see a case where in a particular 30 year period International outperformed. Such evidence has not been offered so far. I would like to see this.

Portfolio Visualizer goes back to 1986 for International and in that 33 year period US had 300% of the returns of International which is a staggering difference.

https://tinyurl.com/y6g7s3av
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bluquark
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Re: VTIAX International fund - should I give up on it?

Post by bluquark »

US-only investors all choose to ignore two fundamental principles: valuation and exponential growth.

- Valuation, a.k.a. "already priced in". Yes, the situation with Brexit isn't looking great. Presumably that's one of the reasons why P/E is lower in Europe. No matter how severe the problem is, there exists a price level where that is cheap enough that it's an equally appealing buy to a US stock. Why is the 30% lower (by some metrics) valuation not yet cheap enough? US-only advocates never name a target valuation nor explain why the market might be mistaken on valuation, they just ignore the whole topic and wouldn't buy international stock even if it was an incredible bargain.

- Exponential growth. CAGR investing returns are exponential by definition. In the real world, there is no exponential growth, only S-curves. Stock returns appear exponential over the last 100+ years because just as one particular S-curve gets exhausted, another technological+social revolution has replaced it.

But it gets harder and harder to grow at the same exponential rate the larger an economy is. More recently, in the US, returns have concentrated wealth in the investor class, instead of coming from GDP growing broadly. This is another type of S-curve which cannot go on forever.

By investing in economies with lower valuations or development levels, it means investing at a lower point in a known S-curve. Instead of discovering a new way to grow, these countries only need to execute acceptably well in solving their problems, adopting existing technology, and following a well-marked reform path. This is great insurance in the increasingly likely event that the US sputters in discovering new revolutions at least for periods of time. Keep in mind, if the US economy does great per se but does not keep relatively getting even greater, that will appear as mediocre returns relative to history.
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TomCat96
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Re: VTIAX International fund - should I give up on it?

Post by TomCat96 »

bluquark wrote: Sat Sep 21, 2019 6:12 pm US-only investors all choose to ignore two fundamental principles: valuation and exponential growth.

- Valuation, a.k.a. "already priced in". Yes, the situation with Brexit isn't looking great. Presumably that's one of the reasons why P/E is lower in Europe. No matter how severe the problem is, there exists a price level where that is cheap enough that it's an equally appealing buy to a US stock. Why is the 50% lower (by some metrics) valuation not yet cheap enough? US-only advocates never name a target valuation nor explain why the market might be mistaken on valuation, they just ignore the whole topic and wouldn't buy international stock even if it was an incredible bargain.

- Exponential growth. CAGR investing returns are exponential by definition. In the real world, there is no exponential growth, only S-curves. Stock returns appear exponential over the last 100+ years because just as one particular S-curve gets exhausted, another technological+social revolution has replaced it.

But it gets harder and harder to grow at the same exponential rate the larger an economy is. More recently, in the US, returns have concentrated wealth in the investor class, instead of coming from GDP growing broadly. This is another type of S-curve which cannot go on forever.

By investing in economies with lower valuations or development levels, it means investing at a lower point in a known S-curve. Instead of discovering a new way to grow, these countries only need to execute acceptably well in solving their problems, adopting existing technology, and following a well-marked reform path. This is great insurance in the increasingly likely event that the US sputters in discovering new revolutions at least for periods of time. Keep in mind, if the US economy does great per se but does not keep relatively getting even greater, that will appear as mediocre returns relative to history.
I wrote about this before.

Only one of these things can be true.

1) International is an incredible bargain right now poised to outperform the US in the long term and you had best get in now.

2) The market knows best. No one can know the future. This argument cannot be reconciled with argument 1 because according to this, International Stocks are fairly priced at the moment.

You cannot have it both ways. You cannot argue that International is set to outperform the US because it's "cheap" and then turn around and advocate for international because of the wisdom of the market.

Pick one. and give that to the younger bogleheads.
typical.investor
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Re: VTIAX International fund - should I give up on it?

Post by typical.investor »

TomCat96 wrote: Sat Sep 21, 2019 6:29 pm
bluquark wrote: Sat Sep 21, 2019 6:12 pm US-only investors all choose to ignore two fundamental principles: valuation and exponential growth.

- Valuation, a.k.a. "already priced in". Yes, the situation with Brexit isn't looking great. Presumably that's one of the reasons why P/E is lower in Europe. No matter how severe the problem is, there exists a price level where that is cheap enough that it's an equally appealing buy to a US stock. Why is the 50% lower (by some metrics) valuation not yet cheap enough? US-only advocates never name a target valuation nor explain why the market might be mistaken on valuation, they just ignore the whole topic and wouldn't buy international stock even if it was an incredible bargain.

- Exponential growth. CAGR investing returns are exponential by definition. In the real world, there is no exponential growth, only S-curves. Stock returns appear exponential over the last 100+ years because just as one particular S-curve gets exhausted, another technological+social revolution has replaced it.

But it gets harder and harder to grow at the same exponential rate the larger an economy is. More recently, in the US, returns have concentrated wealth in the investor class, instead of coming from GDP growing broadly. This is another type of S-curve which cannot go on forever.

By investing in economies with lower valuations or development levels, it means investing at a lower point in a known S-curve. Instead of discovering a new way to grow, these countries only need to execute acceptably well in solving their problems, adopting existing technology, and following a well-marked reform path. This is great insurance in the increasingly likely event that the US sputters in discovering new revolutions at least for periods of time. Keep in mind, if the US economy does great per se but does not keep relatively getting even greater, that will appear as mediocre returns relative to history.
I wrote about this before.

Only one of these things can be true.

1) International is an incredible bargain right now poised to outperform the US in the long term and you had best get in now.

2) The market knows best. No one can know the future. This argument cannot be reconciled with argument 1 because according to this, International Stocks are fairly priced at the moment.

You cannot have it both ways. You cannot argue that International is set to outperform the US because it's "cheap" and then turn around and advocate for international because of the wisdom of the market.
Yeah, but duh, it is both.

Expensive markets are often good buys because they are going up.

Still, cheap stocks are poised for better long term performance.

Why can’t the market say look if you want returns today tomorrow and maybe next week, the US is looking better now. And if you can wait, I’ve got some great deals over here.

Most will go for the hot deal and try to sell it when the next hot deal comes along.

But maybe you should buy both.

And neither the market, nor view of international as cheap is wrong.
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Re: VTIAX International fund - should I give up on it?

Post by bluquark »

TomCat96 wrote: Sat Sep 21, 2019 6:29 pm I wrote about this before.

Only one of these things can be true.

1) International is an incredible bargain right now poised to outperform the US in the long term and you had best get in now.

2) The market knows best. No one can know the future. This argument cannot be reconciled with argument 1 because according to this, International Stocks are fairly priced at the moment.

You cannot have it both ways. You cannot argue that International is set to outperform the US because it's "cheap" and then turn around and advocate for international because of the wisdom of the market.

Pick one. and give that to the younger bogleheads.
The reason I have it both ways is that I'm not actually arguing 2) -- my premise is weaker than "market knows best". Without subscribing to EMH, I observe there exists a fair price and there is no particular reason to believe the current price is not it. The burden of proof is really on US-only advocates, not me, to explain quantitatively, relative to valuation why US is a bargain poised to outperform in the long term. There always must be a "bargain" dimension to overweighting a category of stocks, which the US-only crowd ignore, implying that an asset can be objectively good no matter the price.

I also listed reasons why international is a bargain, to counterbalance the reasons US-only investors have given that it is not. The market has taken all this information (as well as behavioral biases) together and synthesized a particular valuation, which is probably within throwing distance of fair. I personally also believe the market's valuation is probably better than fair and in fact a slight bargain, but I haven't done the math on that, and I don't believe it strongly enough to overweight international.
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vineviz
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Re: VTIAX International fund - should I give up on it?

Post by vineviz »

stocknoob4111 wrote: Sat Sep 21, 2019 5:51 pm
vineviz wrote: Sat Sep 21, 2019 5:47 pm It’s much better to look dispassionately at ALL the evidence, not just the pieces that suit whatever preconceived notions one might have. Otherwise you end up twisting the facts to support your biases.
Which is why I would really like to see rolling 30 year periods and see a case where in a particular 30 year period International outperformed. Such evidence has not been offered so far. I would like to see this.

Portfolio Visualizer goes back to 1986 for International and in that 33 year period US had 300% of the returns of International which is a staggering difference.

https://tinyurl.com/y6g7s3av
Limiting the question to 30-year rolling periods is probably not the best approach statistically, but let's go with it. First, though, let me say that this "horse race" framing of the questionis implicitly discounting the very real diversification benefits that are at play (more on that at the end).

I have data on international equities going back to 1961, which coincidentally is early enough to produce thirty rolling 30-year returns. International stocks outperformed US stocks in 10 of those periods, so 33% of the time. The arithemetic average annual return for international stocks was actually higher (11.46% versus 11.22%) but the geometric average return for international stocks was lower (9.33% vs 9.89%), a difference that flows from the fact that recent performance was worse than earlier performance. In fact, the most recent rolling 30-year period produced the weakest annualized return for international stocks at 4.31%. In short, it's recent underperformance that is the anomaly.

Going back to the weakness of the head-to-head comparison, though, we confront the problem that no informed observer thinks the right thing to do is to invest ONLY in U.S. stocks or ONLY in non-U.S. stocks. The relevant question is whether holding a globally diversified portfolio has any advantage or poses any excess risk.

A hypothetical 50/50 allocation between US stocks and international stocks since 1961 outperformed a US-only allocation in fifteen of the thirty rolling 30-year periods: a full 50% of the time. And if you look at the five worst rolling 30-year periods for US stocks, a 50/50 allocation produced higher returns in 4 of the 5 or 80% of the time.



Code: Select all

Starting Year	International	U.S.	50/50
1961	13.26%	9.63%	11.74%
1962	12.61%	9.75%	11.49%
1963	12.94%	10.35%	11.97%
1964	13.65%	9.95%	12.12%
1965	13.36%	9.46%	11.74%
1966	12.70%	10.22%	11.80%
1967	12.92%	11.40%	12.52%
1968	11.82%	11.61%	12.11%
1969	11.67%	12.00%	12.22%
1970	13.02%	13.13%	13.47%
1971	12.80%	12.53%	13.05%
1972	10.95%	11.63%	11.66%
1973	9.18%	10.19%	10.04%
1974	10.98%	11.86%	11.78%
1975	12.62%	13.52%	13.44%
1976	11.98%	12.58%	12.65%
1977	12.73%	12.34%	12.90%
1978	12.60%	12.85%	13.06%
1979	9.36%	10.91%	10.44%
1980	10.29%	11.34%	11.12%
1981	9.87%	10.96%	10.72%
1982	9.34%	11.15%	10.56%
1983	9.98%	10.96%	10.77%
1984	9.68%	11.29%	10.80%
1985	9.25%	11.51%	10.70%
1986	7.47%	10.48%	9.27%
1987	5.74%	10.32%	8.25%
1988	5.81%	10.88%	8.55%
1989	4.38%	10.14%	7.45%
1990	4.31%	9.74%	7.21%
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
jibantik
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Re: VTIAX International fund - should I give up on it?

Post by jibantik »

The default, null position is to hold market weight. To speculate against that places the burden of proof on YOU.

The issue here is that you have a lot of people who speculate into heavily or fully weighting US for two reasons: (1) performance chasing (2) American exceptionalism bias.

You have people on this board who somehow know how thousands of companies across the globe will perform decades into the future because they noticed US outperforming international in the past few years and because they spent a week in France and didn't like the long lunch breaks. It's a pretty incredible feat when you consider you have teams of PhDs specifically working full time at this who can't even beat the market.
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ruralavalon
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Re: VTIAX International fund - should I give up on it?

Post by ruralavalon »

Ipse dixit.
jibantik wrote: Sat Sep 21, 2019 7:55 pm The default, null position is to hold market weight. To speculate against that places the burden of proof on YOU.

The issue here is that you have a lot of people who speculate into heavily or fully weighting US for two reasons: (1) performance chasing (2) American exceptionalism bias.

You have people on this board who somehow know how thousands of companies across the globe will perform decades into the future because they noticed US outperforming international in the past few years and because they spent a week in France and didn't like the long lunch breaks. It's a pretty incredible feat when you consider you have teams of PhDs specifically working full time at this who can't even beat the market.
Why is it that "The default, null position is to hold market weight"?

It's not true just because you say it is so. What is your reason for that opinion?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
wesgreen
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Re: VTIAX International fund - should I give up on it?

Post by wesgreen »

I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
bltn
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Re: VTIAX International fund - should I give up on it?

Post by bltn »

typical.investor wrote: Sat Sep 21, 2019 9:14 am
goblue100 wrote: Sat Sep 21, 2019 8:29 am
typical.investor wrote: Sat Sep 21, 2019 1:32 am
How do you know the OP is 80?
Yes, Op started the thread but I don't believe has posted since. Poster Munir disclosed his/her age as 80 on page 1.
I see. Sleight of hand to make Munir the OP. They aren’t the same hence my confusion.

The OP was under 40 I think.

Anyway, are we advising people to sell out underperforming assets as we age now? Expected returns are often wrong, but international over the next decade is predicted to do better.

Munir will be around at least that long. Am pretty sure of it!
I ve always read that sequence of returns was an important factor in determining how well a retiree s portfolio did as he made withdrawals. How do the EU economies look currently in comparison with the U S? How about Asian economies? These may get better but l can see why my 15% foreign stock investment in last 15-20 years has decreased to 5% today. I must admit I haven t added much to it in the last few years. (Fortunately).
American exceptionalism might currently be a correct analysis. Being correct early in retirement might be as important as being correct over a 30 year period.
Age might have a lot to do with how one looks at this. A thirty year old might do well to keep 20% in foreign stocks. A 60 year old maybe. A 70 year old, maybe not.
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Re: VTIAX International fund - should I give up on it?

Post by tibbitts »

A question for those throwing in the towel after being in international for a long time: given the same amount of U.S. underperformance in the future over your chosen timeline as international has experienced in the past, at some point would you dump U.S. and move entirely into international?
am
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Re: VTIAX International fund - should I give up on it?

Post by am »

bltn wrote: Sun Sep 22, 2019 9:11 pm
typical.investor wrote: Sat Sep 21, 2019 9:14 am
goblue100 wrote: Sat Sep 21, 2019 8:29 am
typical.investor wrote: Sat Sep 21, 2019 1:32 am
How do you know the OP is 80?
Yes, Op started the thread but I don't believe has posted since. Poster Munir disclosed his/her age as 80 on page 1.
I see. Sleight of hand to make Munir the OP. They aren’t the same hence my confusion.

The OP was under 40 I think.

Anyway, are we advising people to sell out underperforming assets as we age now? Expected returns are often wrong, but international over the next decade is predicted to do better.

Munir will be around at least that long. Am pretty sure of it!
I ve always read that sequence of returns was an important factor in determining how well a retiree s portfolio did as he made withdrawals. How do the EU economies look currently in comparison with the U S? How about Asian economies? These may get better but l can see why my 15% foreign stock investment in last 15-20 years has decreased to 5% today. I must admit I haven t added much to it in the last few years. (Fortunately).
American exceptionalism might currently be a correct analysis. Being correct early in retirement might be as important as being correct over a 30 year period.
Age might have a lot to do with how one looks at this. A thirty year old might do well to keep 20% in foreign stocks. A 60 year old maybe. A 70 year old, maybe not.
And it’s as easy as seeing how the economies “look” and presto, you have the key to future stock returns. If your so sure, why not become wealthy by going short ex-us? This smacks of recency bias and not staying the course. But it’s your money after all so do what you want. Your still doing better with your plan than most.
Day9
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Re: VTIAX International fund - should I give up on it?

Post by Day9 »

One thing I have noticed, none of the people who argue that Europe & Japan do not emphasize shareholder value as much as America does offer a fair valuation spread for this phenomenon. How much of a PE multiplier (or whatever valuation metric you like) is this worth? It certainly matters because at the moment American stocks are above their average historical valuation and international stocks are about at their average historical valuation. And according to cnn.com VTI PE is 19.6 and VXUS PE is 14.2

For the people who think Japan & Europe do not value shareholders as much as USA, what PE spread would you like to see to compensate for that?
I'm just a fan of the person I got my user name from
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Re: VTIAX International fund - should I give up on it?

Post by bluquark »

ruralavalon wrote: Sun Sep 22, 2019 10:50 am Why is it that "The default, null position is to hold market weight"?

It's not true just because you say it is so. What is your reason for that opinion?
As I remember from all the debates about "have index funds gotten too popular?", holding all stocks at market-cap weight is the only holding weight that doesn't move prices. (Well, it makes stocks more expensive relative to bonds, but it maintains the ratio of stock prices relative to one another.).
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
taojaxx
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Re: VTIAX International fund - should I give up on it?

Post by taojaxx »

Just buy VT and leave it at that. You won't have to worry about that anytime. You could make the same point about just any kind of subsector. I think one of the posters made that point: Energy versus tech, healthcare versus utilities, etc... Should you sell the recently underperforming stocks? I'm surprised that there would be such a lengthy debate on this issue on bogleheads. Recency bias at its worst.
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Re: VTIAX International fund - should I give up on it?

Post by Noobvestor »

wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Buy high, sell low, as Jack always said.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
visualguy
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Re: VTIAX International fund - should I give up on it?

Post by visualguy »

wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
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Re: VTIAX International fund - should I give up on it?

Post by Stinky »

Noobvestor wrote: Mon Sep 23, 2019 2:34 am
Buy high, sell low, as Jack always said.
I think you’ve got that backwards?? :confused
It's a GREAT day to be alive - Travis Tritt
rascott
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Re: VTIAX International fund - should I give up on it?

Post by rascott »

visualguy wrote: Mon Sep 23, 2019 2:58 am
wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

visualguy wrote: Mon Sep 23, 2019 2:58 am
wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
Buy high, sell low, recency bias, performance chasing, predicting the future as if U.S. only will continue to work out.
Last edited by lostdog on Mon Sep 23, 2019 8:46 am, edited 1 time in total.
lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

rascott wrote: Mon Sep 23, 2019 5:02 am
visualguy wrote: Mon Sep 23, 2019 2:58 am
wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
deleted
Last edited by lostdog on Mon Sep 23, 2019 8:47 am, edited 1 time in total.
wesgreen
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Re: VTIAX International fund - should I give up on it?

Post by wesgreen »

I'm more optimistic than you about the European project, but not sure as to how that will translate for my personal investing.
As to "A question for those throwing in the towel after being in international for a long time: given the same amount of U.S. underperformance in the future over your chosen timeline as international has experienced in the past, at some point would you dump U.S. and move entirely into international?":
I was 100% stocks until very recently; 1999 and 2008/9 didn't deter me, given the global realities. That confidence hasn't changed much, despite our current political situation. But I've noticed over the years that ignoring John Bogle's advice will cost me dearly. Had I stayed 100% TSM I would have been ready for retirement about 5 years sooner.
catalina355
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Re: VTIAX International fund - should I give up on it?

Post by catalina355 »

rascott wrote: Mon Sep 23, 2019 5:02 am
visualguy wrote: Mon Sep 23, 2019 2:58 am
wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
What ways do you suggest to diversify a portfolio from US large caps?
lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

wesgreen wrote: Mon Sep 23, 2019 8:22 am I'm more optimistic than you about the European project, but not sure as to how that will translate for my personal investing.
As to "A question for those throwing in the towel after being in international for a long time: given the same amount of U.S. underperformance in the future over your chosen timeline as international has experienced in the past, at some point would you dump U.S. and move entirely into international?":
I was 100% stocks until very recently; 1999 and 2008/9 didn't deter me, given the global realities. That confidence hasn't changed much, despite our current political situation. But I've noticed over the years that ignoring John Bogle's advice will cost me dearly. Had I stayed 100% TSM I would have been ready for retirement about 5 years sooner.
Would you suggest a young investor in their early 20's today go 100% TSM?
wesgreen
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Re: VTIAX International fund - should I give up on it?

Post by wesgreen »

I would tell them to read Bogle, and about Bogle, and as many other works on investing as possible, and then make their own decisions. The world will be a very different place 60 years from now, but most historical change happens gradually.
rascott
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Re: VTIAX International fund - should I give up on it?

Post by rascott »

catalina355 wrote: Mon Sep 23, 2019 8:23 am
rascott wrote: Mon Sep 23, 2019 5:02 am
visualguy wrote: Mon Sep 23, 2019 2:58 am
wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
What ways do you suggest to diversify a portfolio from US large caps?

US Small Cap Value
Emerging Markets
and/or Asia Ex- Japan
Canada

All have better risk adjusted returns than total international index over the last 15 years, and their correlations to US Large Cap equity are all equal to or better than TISMI.

Go look at the Eurozone (EZU) and Japan (EWJ) returns for gut wrenching ugliness over last 15 years or so. Get rid of those and Intl isn't as terrible.

Not that tough to build an intl ETF portfolio that excludes the black holes of demographic morass.
lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

rascott wrote: Mon Sep 23, 2019 9:16 am
catalina355 wrote: Mon Sep 23, 2019 8:23 am
rascott wrote: Mon Sep 23, 2019 5:02 am
visualguy wrote: Mon Sep 23, 2019 2:58 am
wesgreen wrote: Sun Sep 22, 2019 8:11 pm I'm out of VTIAX, finally, as of last week. For years I've been telling myself to wait until the dollar weakens again, which it will, eventually. But if that doesn't happen soon, I'm probably better off pulling the plug right now. To each his own - I just can't afford the long term drag on my portfolio. At least I stopped rebalancing into VTIAX about 10 years ago. I've studied history at several universities, have lived, worked and traveled widely abroad, and don't see much to question this decision. Should've listened to John Bogle, and not to Vanguard. I'm happy to invest "like an old person".
Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
What ways do you suggest to diversify a portfolio from US large caps?

US Small Cap Value
Emerging Markets
and/or Asia Ex- Japan
Canada

All have better risk adjusted returns than total international index over the last 15 years, and their correlations to US Large Cap equity are all equal to or better than TISMI.

Go look at the Eurozone (EZU) and Japan (EWJ) returns for gut wrenching ugliness over last 15 years or so. Get rid of those and Intl isn't as terrible.

Not that tough to build an intl ETF portfolio that excludes the black holes of demographic morass.
Would this be the same as avoiding certain sectors within the US index?
rascott
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Re: VTIAX International fund - should I give up on it?

Post by rascott »

lostdog wrote: Mon Sep 23, 2019 9:23 am
rascott wrote: Mon Sep 23, 2019 9:16 am
catalina355 wrote: Mon Sep 23, 2019 8:23 am
rascott wrote: Mon Sep 23, 2019 5:02 am
visualguy wrote: Mon Sep 23, 2019 2:58 am

Congrats! Staying the course makes no sense when it's a bad course. Better late than never. I changed the course and got out of ex-US 20 years ago (thankfully), but I can't say I predicted quite how bad ex-US would turn out to be.
I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
What ways do you suggest to diversify a portfolio from US large caps?

US Small Cap Value
Emerging Markets
and/or Asia Ex- Japan
Canada

All have better risk adjusted returns than total international index over the last 15 years, and their correlations to US Large Cap equity are all equal to or better than TISMI.

Go look at the Eurozone (EZU) and Japan (EWJ) returns for gut wrenching ugliness over last 15 years or so. Get rid of those and Intl isn't as terrible.

Not that tough to build an intl ETF portfolio that excludes the black holes of demographic morass.
Would this be the same as avoiding certain sectors within the US index?
Not really, at least it isn't for me. I just like the idea of investing in overall economies, regardless of the business cycle which is helping/ hindering certain industry sectors within those economies. In practice that means I'm concentrated in US equities of different classes along with emerging markets.
lostdog
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Re: VTIAX International fund - should I give up on it?

Post by lostdog »

rascott wrote: Mon Sep 23, 2019 9:29 am
lostdog wrote: Mon Sep 23, 2019 9:23 am
rascott wrote: Mon Sep 23, 2019 9:16 am
catalina355 wrote: Mon Sep 23, 2019 8:23 am
rascott wrote: Mon Sep 23, 2019 5:02 am

I've always been lowly allocated to intl.... and I've let it dwindle and dwindle for years..... to the point now it's less than 10%....and much of that is in EM. I have zero desire to invest in Europe. None, nada. The EU/EURO was a noble idea, that seemed promising, but has been a colossal failure. These nations will never agree with each other and work together long- term in any kind of coherent fiscal and monetary strategy.... so that is out for me as an investment, barring any major change in geopolitical trends.

There are other ways to diversify a portfolio from US large caps that don't require throwing money into stagnating economies.
What ways do you suggest to diversify a portfolio from US large caps?

US Small Cap Value
Emerging Markets
and/or Asia Ex- Japan
Canada

All have better risk adjusted returns than total international index over the last 15 years, and their correlations to US Large Cap equity are all equal to or better than TISMI.

Go look at the Eurozone (EZU) and Japan (EWJ) returns for gut wrenching ugliness over last 15 years or so. Get rid of those and Intl isn't as terrible.

Not that tough to build an intl ETF portfolio that excludes the black holes of demographic morass.
Would this be the same as avoiding certain sectors within the US index?
Not really, at least it isn't for me. I just like the idea of investing in overall economies, regardless of the business cycle which is helping/ hindering certain industry sectors within those economies. In practice that means I'm concentrated in US equities of different classes along with emerging markets.
Doesn't sound like indexing. More like performance chasing.
rascott
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Re: VTIAX International fund - should I give up on it?

Post by rascott »

lostdog wrote: Mon Sep 23, 2019 9:42 am
rascott wrote: Mon Sep 23, 2019 9:29 am
lostdog wrote: Mon Sep 23, 2019 9:23 am
rascott wrote: Mon Sep 23, 2019 9:16 am
catalina355 wrote: Mon Sep 23, 2019 8:23 am

What ways do you suggest to diversify a portfolio from US large caps?

US Small Cap Value
Emerging Markets
and/or Asia Ex- Japan
Canada

All have better risk adjusted returns than total international index over the last 15 years, and their correlations to US Large Cap equity are all equal to or better than TISMI.

Go look at the Eurozone (EZU) and Japan (EWJ) returns for gut wrenching ugliness over last 15 years or so. Get rid of those and Intl isn't as terrible.

Not that tough to build an intl ETF portfolio that excludes the black holes of demographic morass.
Would this be the same as avoiding certain sectors within the US index?
Not really, at least it isn't for me. I just like the idea of investing in overall economies, regardless of the business cycle which is helping/ hindering certain industry sectors within those economies. In practice that means I'm concentrated in US equities of different classes along with emerging markets.
Doesn't sound like indexing. More like performance chasing.

Guess you can put me in the same camp then of the guy who's name is on this site. I'm not chasing performance whatsoever. I haven't really changed anything in 20+ years.
visualguy
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Joined: Thu Jan 30, 2014 1:32 am

Re: VTIAX International fund - should I give up on it?

Post by visualguy »

rascott,

Yes, the EU and Japan (the largest components of the ex-US index) have stagnated, and this has happened for reasons which have no realistic hope of improving within a relevant time horizon.

On the other hand, a lot is happening in China and India, and that will continue. However, stock market index investing doesn't really enable you to participate effectively (other than through foreign companies doing business there) because of the nature of their economies and stock markets.

What have you seen as the return when limiting to the countries and areas that you mentioned outside the US (excluding the EU and Japan)?
maj
Posts: 446
Joined: Wed Jun 25, 2008 2:58 pm

Re: VTIAX International fund - should I give up on it?

Post by maj »

Lots of good thoughts here. Thank you.

I am longtime indexer and diversified globally.
However, growing older I am concerned about global instability political and economic. Instability seems to have expanded in recent decade and currently does not offer hope of stability.

I am aware that Vanguard will soon offer an international managed fund (Wellington Management Co.), which is considered a core international fund:
all size caps, growth and value, developed and emerging nations.
I am giving serious thought to investing when it is offered to public, and reducing/eliminating global indexed exposure.

Any thoughts.

peace
stocknoob4111
Posts: 1516
Joined: Sun Jan 07, 2018 12:52 pm

Re: VTIAX International fund - should I give up on it?

Post by stocknoob4111 »

I've been reading Jason Zweig's excellent article: https://jasonzweig.com/invest-globally-still/

For now and the long term, I am staying put - keeping my 20% International allocation.
wesgreen
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Joined: Fri Jan 07, 2011 9:14 am

Re: VTIAX International fund - should I give up on it?

Post by wesgreen »

If I were him, I wouldn't have republished that article from 20 years ago. Vanguard Total Intl Stock Index Inv., which he recommended then, has averaged 4.58% since inception 23 years ago. Not impressed.
stocknoob4111
Posts: 1516
Joined: Sun Jan 07, 2018 12:52 pm

Re: VTIAX International fund - should I give up on it?

Post by stocknoob4111 »

wesgreen wrote: Mon Sep 23, 2019 11:54 am If I were him, I wouldn't have republished that article from 20 years ago. Vanguard Total Intl Stock Index Inv., which he recommended then, has averaged 4.58% since inception 23 years ago. Not impressed.
True, but the US has performed miserably as well, take 2000-2013 where returns were ZERO real for the US market so i'm not so sure betting on the US entirely is prudent... in the article Zweig argues that extraordinary stimulus of Trillions since 2008 has artificially buoyed US stocks more than the rest of the Globe.

"Looking back in time from today, U.S. stocks seem to have dominated over the long run only because they have done so extraordinarily well over the past few years.

Lofted by a strong currency and trillions of dollars of fiscal and monetary stimulus, U.S. stocks rose so swiftly out of the financial crisis that they left the rest of the world behind. That spectacular recovery has obscured the historical record.

The U.S. was among the worst-performing stock markets worldwide in the 1970s and the 2000s; it also earned lower returns than the average international market in the 1980s."


One of the concerns is also that the US market is heavily Tech dominated and that may be in an epic bubble so who knows.
visualguy
Posts: 2083
Joined: Thu Jan 30, 2014 1:32 am

Re: VTIAX International fund - should I give up on it?

Post by visualguy »

stocknoob4111 wrote: Mon Sep 23, 2019 12:34 pm
wesgreen wrote: Mon Sep 23, 2019 11:54 am If I were him, I wouldn't have republished that article from 20 years ago. Vanguard Total Intl Stock Index Inv., which he recommended then, has averaged 4.58% since inception 23 years ago. Not impressed.
True, but the US has performed miserably as well, take 2000-2013 where returns were ZERO real for the US market so i'm not so sure betting on the US entirely is prudent... in the article Zweig argues that extraordinary stimulus of Trillions since 2008 has artificially buoyed US stocks more than the rest of the Globe.

"Looking back in time from today, U.S. stocks seem to have dominated over the long run only because they have done so extraordinarily well over the past few years.

Lofted by a strong currency and trillions of dollars of fiscal and monetary stimulus, U.S. stocks rose so swiftly out of the financial crisis that they left the rest of the world behind. That spectacular recovery has obscured the historical record.

The U.S. was among the worst-performing stock markets worldwide in the 1970s and the 2000s; it also earned lower returns than the average international market in the 1980s."


One of the concerns is also that the US market is heavily Tech dominated and that may be in an epic bubble so who knows.
One problem with this argument is that the US out-performed ex-US significantly over the long run even if you stop before the stimulus started and don't take into account what happened since then. You can find these numbers in the Credit Swiss Yearbook from back then.

Also, attributing all that happened since the crisis to stimulus is ridiculous. It ignores the big impact of the developments in the tech sector, for example, and the reasons these developments emerge in the US and not in the EU or Japan. What major new public companies and industries have emerged in the EU or Japan in recent decades? Why would we expect that to change?
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