Ditching International

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retire57
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Ditching International

Post by retire57 »

MFJ, 12% tax bracket, retired. Our taxable holdings consist of:

68% total U.S.stock index (VTSAX) $399,560
32% total international stock (VTIAX) $184,115

I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
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galawdawg
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Re: Ditching International

Post by galawdawg »

retire57 wrote: Sun Jun 14, 2020 5:16 pm MFJ, 12% tax bracket, retired. Our taxable holdings consist of:

68% total U.S.stock index (VTSAX) $399,560
32% total international stock (VTIAX) $184,115

I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
Do you have any gains in VTIAX?

Vanguard did a financial plan for us in 2010 and recommended selling 20% of VTSAX and putting it in VTIAX. I liked Jack Bogle's philosophy about international stock, so we declined. By disregarding Vanguard's advice, we realized a gain of over $250,000 since then that we wouldn't have had if we had moved 20% of our equity holdings to international.

I think Vanguard does a real disservice to it's "owner-clients" with their boilerplate recommendation that all investors should have at least 20% of their equity holdings in international.
livesoft
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Re: Ditching International

Post by livesoft »

retire57 wrote: Sun Jun 14, 2020 5:16 pm How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
I would not incur a tax cost to switch. So that means:
1. Stop reinvesting any dividends.
2. Sell any and ALL losing positions (lots) of VTIAX.
3. Sell all shares with the least gains to offset any of the realized losses.
4. Sell more shares up to the top of the 0% long-term capital gains tax bracket.

You can infer that you should wait for any unrealized short-term gains left after doing 1-4 above should be held until they become unrealized losses or long-term gains.

5. Next tax year continue with 1-4.
Last edited by livesoft on Sun Jun 14, 2020 5:34 pm, edited 1 time in total.
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Topic Author
retire57
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Re: Ditching International

Post by retire57 »

We've owned VTSAX for ages so, yes, there would be gains. You did the right thing, galawdawg!
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galawdawg
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Re: Ditching International

Post by galawdawg »

retire57 wrote: Sun Jun 14, 2020 5:34 pm We've owned VTSAX for ages so, yes, there would be gains. You did the right thing, galawdawg!
Sorry, maybe my question wasn't clear. Any gains in VTIAX (International Index)?
lostdog
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Re: Ditching International

Post by lostdog »

retire57 wrote: Sun Jun 14, 2020 5:16 pm MFJ, 12% tax bracket, retired. Our taxable holdings consist of:

68% total U.S.stock index (VTSAX) $399,560
32% total international stock (VTIAX) $184,115

I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
tibbitts
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Re: Ditching International

Post by tibbitts »

retire57 wrote: Sun Jun 14, 2020 5:16 pm MFJ, 12% tax bracket, retired. Our taxable holdings consist of:

68% total U.S.stock index (VTSAX) $399,560
32% total international stock (VTIAX) $184,115

I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
I would lump sum since it is an equity-to-equity exchange.

I think international is sort of like politics has become: people look at the same thing and come up with exactly opposing conclusions. And both sides believe the other is missing an incredibly obvious point, and is just completely wrong - so it's way beyond a difference of opinion.
Triple digit golfer
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Re: Ditching International

Post by Triple digit golfer »

Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
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fishandgolf
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Re: Ditching International

Post by fishandgolf »

Do you have any gains in VTIAX?

Vanguard did a financial plan for us in 2010 and recommended selling 20% of VTSAX and putting it in VTIAX. I liked Jack Bogle's philosophy about international stock, so we declined. By disregarding Vanguard's advice, we realized a gain of over $250,000 since then that we wouldn't have had if we had moved 20% of our equity holdings to international.

I think Vanguard does a real disservice to it's "owner-clients" with their boilerplate recommendation that all investors should have at least 20% of their equity holdings in international.


I concur..........just like that old 70's 7-up commercial........."Never had it (international).......never will"..... :sharebeer

Edit: OK.....if I was in my early days of investing (20's or 30's) I would probably have some exposure to international. Unfortunately.....nearing age 70....not a chance.... :sharebeer
Last edited by fishandgolf on Sun Jun 14, 2020 6:15 pm, edited 1 time in total.
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anon_investor
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Re: Ditching International

Post by anon_investor »

Triple digit golfer wrote: Sun Jun 14, 2020 6:06 pm Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
Actually he consistantly said international was unnecessary, but if you must, no more than 20%.
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mrspock
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Re: Ditching International

Post by mrspock »

lostdog wrote: Sun Jun 14, 2020 5:42 pm
retire57 wrote: Sun Jun 14, 2020 5:16 pm MFJ, 12% tax bracket, retired. Our taxable holdings consist of:

68% total U.S.stock index (VTSAX) $399,560
32% total international stock (VTIAX) $184,115

I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
The problem with the international thesis, is that it’s one without bounds. Purveyors of it simply tell folks to hang on to it for some undetermined amount of time, saying “trust me.... our ship will come in!” .

It’s not as if international has good years and bad years and is lagging a bit... it’s that it’s a thesis which has had maybe two brief periods in 40+ years being correct — one of which was the absurd Japanese bubble. Accusing people of performance chasing under such conditions is a bit much in my eyes. They are removing a tilt in their portfolio while still maintaining the overall Boglehead philosophy. Seems reasonable to me.

As for recency, there is nothing recent about US our performance, the US stock market has been pulling off this trick for over 100 years

Also, was OP performance chasing five years ago? (adding international after the brief financial crisis our performance). If so, they are simply undoing an old sin, so I hope the perf chasing crowd is supportive.

As for how to pull it off? I’d probably look at my tax situation and try to keep the taxes in check. To this end:

1. Taxable accounts: Immediately sell off lots which have losses. Tax sheltered: Immediately sell off as much international as you like exchanging for US.
2. TLH as much as possible throughout the year. Buy US equities when selling the international lots with losses as in #1.
3. At the end of the year, tally up losses on the US side, sell down international lots with gains. You can also do this as you go if you like.
4. Divert future excess dividends to cash and use them to buy

Aim to get a lower AA over time, vs wiping it out in one year out of frustration. You need to balance the capital gains taxes against the excess gains on US equities which may or may not happen in the near term. I’d say do 1-4 and see how far this gets you.

Once you get to 10-15% maybe take a breather and see what the drag is vs the drag of capital loss due to capital gains taxes — in fact it’s probably worth doing this calculation before considering paying any capital gains taxes to do this.
lakpr
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Re: Ditching International

Post by lakpr »

+100 to mrspock's advice. Couldn't have put it any better than that!

FYI, I am also on the fence with the international stocks. My allocation is 70:30, and I hold 20% of the stocks ( = 15% of the overall portfolio ) in international equities. But since I fully expect international under-performance to continue through my lifetime, at least until I retire, I want Uncle Sam to share the misery with me, so hold them only in 401k plan.

Why have I settled on this percentage? because a Vanguard paper back in 2012 said that, if you allocate 20% of your stock portfolio to be allocated to international stocks you will capture 84% of the diversification benefit; and with 30%, almost the full benefit (99%). Increasing the international stocks allocation beyond that 30% is questionable.

Given my feeling that international equities would under-perform, but still provide diversification, I chose to settle at 20% and capture the 84% of diversification. The trade off ... reduce international equity exposure by a third but only give up 16% of diversification benefit, seemed fair to me.

If in the future international equities outperform US, well, I will have captured some of that benefit. I don't mind sharing the good fortune with Uncle Sam. If not, oh well, Uncle Sam gave me a tax break on the contribution, and will continue giving me tax break until I retire. I will revisit the international allocation when I do actually retire, in about 15 years.
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retire57
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Re: Ditching International

Post by retire57 »


What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
Triple digit golfer
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Re: Ditching International

Post by Triple digit golfer »

anon_investor wrote: Sun Jun 14, 2020 6:13 pm
Triple digit golfer wrote: Sun Jun 14, 2020 6:06 pm Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
Actually he consistantly said international was unnecessary, but if you must, no more than 20%.
And he also said this:

"Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."--"We say stay the course. But before you stay the course, make sure you're on the right course."Stay the course. Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor."

And this:

"If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself."
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retire57
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Re: Ditching International

Post by retire57 »

Sorry, maybe my question wasn't clear. Any gains in VTIAX (International Index)?
Looks like $2,143 in gains.
Trader Joe
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Re: Ditching International

Post by Trader Joe »

retire57 wrote: Sun Jun 14, 2020 5:16 pm MFJ, 12% tax bracket, retired. Our taxable holdings consist of:

68% total U.S.stock index (VTSAX) $399,560
32% total international stock (VTIAX) $184,115

I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
I would convert to VTSAX asap as one lump sum. Now is the time to act.
tibbitts
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Re: Ditching International

Post by tibbitts »

retire57 wrote: Sun Jun 14, 2020 6:33 pm

What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
No, you can't correct "mistakes", even assuming they are mistakes. You take a position early in your investing life, knowing that what you're doing could take a lifetime or more to play out. It's the same as we're seeing with SCV now - except SCV advocates don't have the simple logic of world market weight to fall back on. But they've made a bet and now we're seeing a lot of them bail on it, even though they had made it knowing it might not pay off in their lifetimes. The only way to guarantee any strategy won't pay off is to bail on it.
Miriam2
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Re: Ditching International

Post by Miriam2 »

retire57 wrote: . . . I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
Yes you can, even Mr. Bogle would approve, judging from his remarks at one of our Bogleheads Conferences when he said one of his biggest financial mistakes after college was buying stock from a college friend who became a stock broker. Mr. Bogle said he couldn't stand the phone calls from the broker, couldn't stand the stocks, and that was the end of that 8-)
John Bogle, "The Twelve Pillars of [Financial] Wisdom"- Pillar 5: Diversify, Diversify, Diversify.
livesoft
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Re: Ditching International

Post by livesoft »

retire57 wrote: Sun Jun 14, 2020 6:39 pm
Sorry, maybe my question wasn't clear. Any gains in VTIAX (International Index)?
Looks like $2,143 in gains.
With only $2,143 in unrealized gains, I would not hesitate to exchange to VTSAX tomorrow. Even if you do not have any realized losses to offset these gains, I think you will have some by the end of the year, so that you won't have to pay any capital gains taxes on your VTIAX shares (as long as you eventually sell those unrealized losses).
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retire57
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Re: Ditching International

Post by retire57 »

Triple digit golfer wrote: Sun Jun 14, 2020 6:06 pm Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
Is that 32% of one's total portfolio or 32% of equities? (VTIAX accounts for 15% of our total portfolio.)
CFM300
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Re: Ditching International

Post by CFM300 »

retire57 wrote: Sun Jun 14, 2020 6:39 pm Looks like $2,143 in gains.
Login to Vanguard's website now and exchange all shares of VTIAX for VTSAX. :beer

(Personally, I'd keep an allocation of 20% of stocks to international, but if you want to sell them all, just do it and be done with it.)
Last edited by CFM300 on Sun Jun 14, 2020 6:56 pm, edited 1 time in total.
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galawdawg
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Re: Ditching International

Post by galawdawg »

Triple digit golfer wrote: Sun Jun 14, 2020 6:35 pm
anon_investor wrote: Sun Jun 14, 2020 6:13 pm
Triple digit golfer wrote: Sun Jun 14, 2020 6:06 pm Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
Actually he consistantly said international was unnecessary, but if you must, no more than 20%.
And he also said this:

"Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."--"We say stay the course. But before you stay the course, make sure you're on the right course."Stay the course. Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor."

And this:

"If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself."
And that is exactly the problem here. Vanguard PAS has a "one-size fits all" approach...and part of that approach is to have EVERYONE put at least 20% of their equity holdings in international. Some Bogleheads report that Vanguard PAS has told them that they require them to have that in their portfolio to use VPAS. I'm not sure why they call it Vanguard Personal Advisor Service...there isn't much personal about it.

So it appears that this is not a case where OP reviewed all of the risks, potential advantages and potential drawbacks of international equities and made an informed decision to invest.

And since the OP has minimal gains, my recommendation is that he exchange all of his VTIAX into VTSAX. By doing it as an exchange, he avoids any time out of the market.
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galawdawg
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Re: Ditching International

Post by galawdawg »

tibbitts wrote: Sun Jun 14, 2020 6:42 pm
retire57 wrote: Sun Jun 14, 2020 6:33 pm

What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
No, you can't correct "mistakes", even assuming they are mistakes. You take a position early in your investing life, knowing that what you're doing could take a lifetime or more to play out. It's the same as we're seeing with SCV now - except SCV advocates don't have the simple logic of world market weight to fall back on. But they've made a bet and now we're seeing a lot of them bail on it, even though they had made it knowing it might not pay off in their lifetimes. The only way to guarantee any strategy won't pay off is to bail on it.
Surely you aren't serious about this advice??
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galawdawg
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Re: Ditching International

Post by galawdawg »

Triple digit golfer wrote: Sun Jun 14, 2020 6:06 pm Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
I believe Jack disagrees with you! :wink:

Here's an interview Christine Benz did with Jack in 2018, "Why Jack Bogle Doesn't Own Non-US Stocks": https://www.morningstar.com/articles/88 ... -us-stocks

From the interview:
I do tell people, feel free to disagree with me because I'm not always right, but I have 0% in non-U.S. I say you don't need to have non-U.S., but if you do, limit it to 20%. A lot of portfolios now have 25%, 35%, 45% in non-U.S. securities, and I think that's just too much.
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Re: Ditching International

Post by Luckywon »

OP the fact you have already made up your mind about international and are asking only about how to divest from it will not inhibit this thread from devolving into another repetition of the merits of international vs domestic and the merits of staying the course. Anyway, I'd suggest you not be distracted by that-my opinion is that your decision is perfectly reasonable and since you have minimal capital gains in your VTIAX holding I'd recommend you lump sum sell it and purchase VTSAX, at your earliest convenience. Keep an eye out for TLH opportunities the rest of this year.
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retire57
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Re: Ditching International

Post by retire57 »

Luckywon wrote: Sun Jun 14, 2020 7:13 pm OP the fact you have already made up your mind about international and are asking only about how to divest from it will not inhibit this thread from devolving into another repetition of the merits of international vs domestic and the merits of staying the course. Anyway, I'd suggest you not be distracted by that-my opinion is that your decision is perfectly reasonable and since you have minimal capital gains in your VTIAX holding I'd recommend you lump sum sell it and purchase VTSAX, at your earliest convenience. Keep an eye out for TLH opportunities the rest of this year.
It appears so! Thank you, luckywon, and to everyone else who offered advice! (Even those who accuse me of being, at best, irresolute and, at worst, practically day-trading.) :wink:
Colorado Guy
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Re: Ditching International

Post by Colorado Guy »

retire57 wrote: Sun Jun 14, 2020 6:39 pm
Sorry, maybe my question wasn't clear. Any gains in VTIAX (International Index)?
Looks like $2,143 in gains.
Wow! That's a compelling argument to stay in International, about 1% over the 5 year period...NOT! Could have left it in MM...

I am generally a hold it guy, but took the recent downturn (plus retiring at the same time!) to look at my overall strategy, came to the conclusion to get out of international when I rebalanced. I did it as a lump sum the next day. The only difference is that I did it during the market drop, so I actually got a small THL.

Of course, someone will criticize your decision regardless of what you decide. There have been several threads in the past few weeks on what to do with International, with smart people on both sides of the discussion. You may want to read some of them if you need to reinforce or change your thoughts.

Good luck!
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Re: Ditching International

Post by bgf »

retire57 wrote: Sun Jun 14, 2020 6:33 pm

What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
You can do whatever you want. Just sell it and buy the US fund. If you're going to do it, it only makes sense to do it all at once. The more decisions you make, the worse off you're likely to be.

Sell it all, buy US, and then sounds like you'll be able to relax.
Last edited by bgf on Sun Jun 14, 2020 7:36 pm, edited 1 time in total.
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happyisland
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Re: Ditching International

Post by happyisland »

Here are the 12 pillars of Bogle's investing philosophy. I think the plan to ditch international probably runs afoul of Pillars 2, 5, 7, 8, 10, 11, and 12.

Pillar 1. Investing Is Not Nearly as Difficult as It Looks
Pillar 2. When All Else Fails, Fall Back on Simplicity
Pillar 3. Time Marches On
Pillar 4. Nothing Ventured, Nothing Gained
Pillar 5. Diversify, Diversify, Diversify
Pillar 6. The Eternal Triangle
Pillar 7. The Powerful Magnetism of the Mean
Pillar 8. Do Not Overestimate Your Ability to Pick Superior Equity Mutual Funds, nor Underestimate Your Ability to Pick Superior Bond and Money Market Funds
Pillar 9. You May Have a Stable Principal Value or a Stable Income Stream, But You May Not Have Both
Pillar 10. Beware of "Fighting the Last War"
Pillar 11. You Rarely, If Ever, Know Something The Market Does Not
Pillar 12. Think Long-Term
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LiveSimple
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Re: Ditching International

Post by LiveSimple »

retire57 wrote: Sun Jun 14, 2020 5:16 pm
I'm ready to exchange VTIAX for more VTSAX due to international's lackluster performance. (I regret letting the Vanguard PAS talk us into investing in international 5 years ago. We no longer use that service.)

How would you go about doing this? Lump sum? DCA? Tax-loss harvest? Thanks in advance!
Today or tomorrow, just sell and buy, sell International and buy total stock an exchange.

Since you have been thinking of this exchange and your capital gains are less than $3 K, just go ahead with one lumpsum, may be you will sleep better.
Never look back to ak=dd international.

I am 0% international for more than a decade, happy. You do not need to own every world stock for a happy retirement. Total US Stock Market index will do.... go ahead make the exchange
tj
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Re: Ditching International

Post by tj »

As long as you understanding that you bought high and sold low, sure. That's usually the opposite of the goal though....
lakpr
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Re: Ditching International

Post by lakpr »

tj wrote: Sun Jun 14, 2020 8:08 pm As long as you understanding that you bought high and sold low, sure. That's usually the opposite of the goal though....
Not quite; OP said he still has some gains of $2k. But earning that $2k took almost a decade
Tamalak
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Re: Ditching International

Post by Tamalak »

This thread highlights the importance of choosing a financial plan that you like and not one that's chosen for you. Either way segments of it will have lackluster performance.. but if someone else chose those segments it will emotionally be a lot more obnoxious to deal with.

My AA is 50% international and although the awful performance has been really annoying, I have no trouble sticking with it because I chose it for reasons that have not been falsified.
The problem with the international thesis, is that it’s one without bounds. Purveyors of it simply tell folks to hang on to it for some undetermined amount of time, saying “trust me.... our ship will come in!” .
All stock investment is an adventure. An adventure where you don't know what will happen. I don't have any 'trust' that international returns will eventually be good. They could suck for the rest of my life. For that matter, domestic returns could suck for the rest of my life. I don't know anything and all gains and losses up to this point are sunk, and don't signify the future.
Last edited by Tamalak on Sun Jun 14, 2020 8:37 pm, edited 3 times in total.
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Re: Ditching International

Post by Rowan Oak »

mrspock wrote: Sun Jun 14, 2020 6:17 pm The problem with the international thesis, is that it’s one without bounds. Purveyors of it simply tell folks to hang on to it for some undetermined amount of time, saying “trust me.... our ship will come in!” .
"It's easy to grin / When your ship comes in / And you've got the stock market beat. / But the man worthwhile, / Is the man who can smile, / When his shorts are too tight in the seat."
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
stan1
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Re: Ditching International

Post by stan1 »

retire57 wrote: Sun Jun 14, 2020 6:39 pm
Sorry, maybe my question wasn't clear. Any gains in VTIAX (International Index)?
Looks like $2,143 in gains.
Then put in the exchange transaction tonight, let it execute tomorrow, and you'll have what you want. Tax cost will be minimal.
tibbitts
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Re: Ditching International

Post by tibbitts »

galawdawg wrote: Sun Jun 14, 2020 6:56 pm
tibbitts wrote: Sun Jun 14, 2020 6:42 pm
retire57 wrote: Sun Jun 14, 2020 6:33 pm

What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
No, you can't correct "mistakes", even assuming they are mistakes. You take a position early in your investing life, knowing that what you're doing could take a lifetime or more to play out. It's the same as we're seeing with SCV now - except SCV advocates don't have the simple logic of world market weight to fall back on. But they've made a bet and now we're seeing a lot of them bail on it, even though they had made it knowing it might not pay off in their lifetimes. The only way to guarantee any strategy won't pay off is to bail on it.
Surely you aren't serious about this advice??
I'm completely serious but it isn't really advice - the OP has his mind made up. I'm just stating the fact that once you determine a strategy that you acknowledge might take your lifetime or longer to pay off, you can't bail on it after a few years or decades of sub-optimal results.
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mrspock
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Re: Ditching International

Post by mrspock »

Rowan Oak wrote: Sun Jun 14, 2020 8:26 pm
mrspock wrote: Sun Jun 14, 2020 6:17 pm The problem with the international thesis, is that it’s one without bounds. Purveyors of it simply tell folks to hang on to it for some undetermined amount of time, saying “trust me.... our ship will come in!” .
"It's easy to grin / When your ship comes in / And you've got the stock market beat. / But the man worthwhile, / Is the man who can smile, / When his shorts are too tight in the seat."
I see your quote and raise you:

“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

Nice signature ;)
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Rowan Oak
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Re: Ditching International

Post by Rowan Oak »

galawdawg wrote: Sun Jun 14, 2020 7:04 pm
Triple digit golfer wrote: Sun Jun 14, 2020 6:06 pm Jack Bogle would not approve of an investor not staying the course. He would approve of a modest 32% international allocation if that was one's chosen course years ago.
I believe Jack disagrees with you! :wink:

Here's an interview Christine Benz did with Jack in 2018, "Why Jack Bogle Doesn't Own Non-US Stocks": https://www.morningstar.com/articles/88 ... -us-stocks

From the interview:
I do tell people, feel free to disagree with me because I'm not always right, but I have 0% in non-U.S. I say you don't need to have non-U.S., but if you do, limit it to 20%. A lot of portfolios now have 25%, 35%, 45% in non-U.S. securities, and I think that's just too much.
I had forgotten about this interview. He couldn't have been more clear on what he thinks about investing in international stocks.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
Ferdinand2014
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Re: Ditching International

Post by Ferdinand2014 »

Tamalak wrote: Sun Jun 14, 2020 8:24 pm This thread highlights the importance of choosing a financial plan that you like and not one that's chosen for you. Either way segments of it will have lackluster performance.. but if someone else chose those segments it will emotionally be a lot more obnoxious to deal with.

My AA is 50% international and although the awful performance has been really annoying, I have no trouble sticking with it because I chose it for reasons that have not been falsified.
The problem with the international thesis, is that it’s one without bounds. Purveyors of it simply tell folks to hang on to it for some undetermined amount of time, saying “trust me.... our ship will come in!” .
All stock investment is an adventure. An adventure where you don't know what will happen. I don't have any 'trust' that international returns will eventually be good. They could suck for the rest of my life. For that matter, domestic returns could suck for the rest of my life. I don't know anything and all gains and losses up to this point are sunk, and don't signify the future.
Bingo. The OP’s entire post is an example of designing a portfolio around someone else’s idea of what is best. Without conviction, the result is the inability to stay the course, which is likely to result in a much worse outcome than some idealized allocation based on theory. It is so important to read, learn, consider your own behavioral tendencies, life experiences, etc and ultimately decide for yourself - only yourself - ultimately what set of convictions will allow you to stay the course.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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galawdawg
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Re: Ditching International

Post by galawdawg »

tibbitts wrote: Sun Jun 14, 2020 8:33 pm
galawdawg wrote: Sun Jun 14, 2020 6:56 pm
tibbitts wrote: Sun Jun 14, 2020 6:42 pm
retire57 wrote: Sun Jun 14, 2020 6:33 pm

What will you do if VTIAX outperforms VTSAX for many years to come? Switch back? :oops:

What you're doing is called recency bias and performance chasing. There are other popular/prominent members here that do the same but they won't admit it. You'll most likely get approval and a pat on the back from them. Good luck.
Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
No, you can't correct "mistakes", even assuming they are mistakes. You take a position early in your investing life, knowing that what you're doing could take a lifetime or more to play out. It's the same as we're seeing with SCV now - except SCV advocates don't have the simple logic of world market weight to fall back on. But they've made a bet and now we're seeing a lot of them bail on it, even though they had made it knowing it might not pay off in their lifetimes. The only way to guarantee any strategy won't pay off is to bail on it.
Surely you aren't serious about this advice??
I'm completely serious but it isn't really advice - the OP has his mind made up. I'm just stating the fact that once you determine a strategy that you acknowledge might take your lifetime or longer to pay off, you can't bail on it after a few years or decades of sub-optimal results.
Would you tell the market timing traders that periodically post here the same thing?
jibantik
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Re: Ditching International

Post by jibantik »

The amount of people on this thread justifying their investment decisions based on past performance is something you'd expect to see in a Jim Cramer fan club site.

Getting rid of international is a terrible strategy. Getting rid of international because you are disappointed in 5 year returns is a really poor justification. It's a bad decision based on bad reasoning. What more is there to say.
tibbitts
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Re: Ditching International

Post by tibbitts »

galawdawg wrote: Sun Jun 14, 2020 9:30 pm
tibbitts wrote: Sun Jun 14, 2020 8:33 pm
galawdawg wrote: Sun Jun 14, 2020 6:56 pm
tibbitts wrote: Sun Jun 14, 2020 6:42 pm
retire57 wrote: Sun Jun 14, 2020 6:33 pm

Sigh. I figured someone would bring up this point. I can hardly be described as a "performance chaser" since, in 35+ years of investing, I've never sold any taxable shares. (Which is why I'm asking for advice). No, my big sin was not listening to my gut 5 years ago.

Are we not allowed to correct mistakes at the risk of being accused of not staying the course?
No, you can't correct "mistakes", even assuming they are mistakes. You take a position early in your investing life, knowing that what you're doing could take a lifetime or more to play out. It's the same as we're seeing with SCV now - except SCV advocates don't have the simple logic of world market weight to fall back on. But they've made a bet and now we're seeing a lot of them bail on it, even though they had made it knowing it might not pay off in their lifetimes. The only way to guarantee any strategy won't pay off is to bail on it.
Surely you aren't serious about this advice??
I'm completely serious but it isn't really advice - the OP has his mind made up. I'm just stating the fact that once you determine a strategy that you acknowledge might take your lifetime or longer to pay off, you can't bail on it after a few years or decades of sub-optimal results.
Would you tell the market timing traders that periodically post here the same thing?
Absolutely, with one exception: timers who trade on "feelings." As long as what you're doing is algorithm-based you should stick to it - you have to. I don't believe timing will work out for most people, but it definitely won't if it isn't done consistently.

An important concept here is that you made the original decision based on some level of research, and with the understanding that what you were doing might not work out during your investing lifetime. People aren't changing their minds because their research was "wrong"; they're changing it because it hasn't worked in their favor, yet.
lostdog
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Re: Ditching International

Post by lostdog »

jibantik wrote: Sun Jun 14, 2020 9:34 pm The amount of people on this thread justifying their investment decisions based on past performance is something you'd expect to see in a Jim Cramer fan club site.

Getting rid of international is a terrible strategy. Getting rid of international because you are disappointed in 5 year returns is a really poor justification. It's a bad decision based on bad reasoning. What more is there to say.
The rationalizing on this thread is entertaining.
lakpr
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Re: Ditching International

Post by lakpr »

tibbitts wrote: Sun Jun 14, 2020 9:59 pm
galawdawg wrote: Sun Jun 14, 2020 9:30 pm
tibbitts wrote: Sun Jun 14, 2020 8:33 pm
galawdawg wrote: Sun Jun 14, 2020 6:56 pm
tibbitts wrote: Sun Jun 14, 2020 6:42 pm
No, you can't correct "mistakes", even assuming they are mistakes. You take a position early in your investing life, knowing that what you're doing could take a lifetime or more to play out. It's the same as we're seeing with SCV now - except SCV advocates don't have the simple logic of world market weight to fall back on. But they've made a bet and now we're seeing a lot of them bail on it, even though they had made it knowing it might not pay off in their lifetimes. The only way to guarantee any strategy won't pay off is to bail on it.
Surely you aren't serious about this advice??
I'm completely serious but it isn't really advice - the OP has his mind made up. I'm just stating the fact that once you determine a strategy that you acknowledge might take your lifetime or longer to pay off, you can't bail on it after a few years or decades of sub-optimal results.
Would you tell the market timing traders that periodically post here the same thing?
Absolutely, with one exception: timers who trade on "feelings." As long as what you're doing is algorithm-based you should stick to it - you have to. I don't believe timing will work out for most people, but it definitely won't if it isn't done consistently.

An important concept here is that you made the original decision based on some level of research, and with the understanding that what you were doing might not work out during your investing lifetime. People aren't changing their minds because their research was "wrong"; they're changing it because it hasn't worked in their favor, yet.
This is very much the definition of insanity -- "doing the same thing over and over again, and expecting a different result"
tibbitts
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Re: Ditching International

Post by tibbitts »

lakpr wrote: Mon Jun 15, 2020 7:43 am
tibbitts wrote: Sun Jun 14, 2020 9:59 pm
galawdawg wrote: Sun Jun 14, 2020 9:30 pm
tibbitts wrote: Sun Jun 14, 2020 8:33 pm
galawdawg wrote: Sun Jun 14, 2020 6:56 pm
Surely you aren't serious about this advice??
I'm completely serious but it isn't really advice - the OP has his mind made up. I'm just stating the fact that once you determine a strategy that you acknowledge might take your lifetime or longer to pay off, you can't bail on it after a few years or decades of sub-optimal results.
Would you tell the market timing traders that periodically post here the same thing?
Absolutely, with one exception: timers who trade on "feelings." As long as what you're doing is algorithm-based you should stick to it - you have to. I don't believe timing will work out for most people, but it definitely won't if it isn't done consistently.

An important concept here is that you made the original decision based on some level of research, and with the understanding that what you were doing might not work out during your investing lifetime. People aren't changing their minds because their research was "wrong"; they're changing it because it hasn't worked in their favor, yet.
This is very much the definition of insanity -- "doing the same thing over and over again, and expecting a different result"
As I've said it's like politics: people look at the same issues, candidates, etc. Half vote one way and half the other. Both halves think the other is insane.
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ruralavalon
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Re: Ditching International

Post by ruralavalon »

CFM300 wrote: Sun Jun 14, 2020 6:54 pm
retire57 wrote: Sun Jun 14, 2020 6:39 pm Looks like $2,143 in gains.
Login to Vanguard's website now and exchange all shares of VTIAX for VTSAX. :beer

(Personally, I'd keep an allocation of 20% of stocks to international, but if you want to sell them all, just do it and be done with it.)
+ 1.

Do what you you believe is right for you, ignore the pro forma insults about recency bias and performance chasing
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
BoggledHead2
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Re: Ditching International

Post by BoggledHead2 »

It’s pretty incredible that people still dismiss International despite periods of time International has outperformed, as well as the changing global landscape

China/Asia are laying down infrastructure with manufacturing already in place to eventually became the world’s #1 economy ... but hey, US has been doing a lot better recently so why bother acknowledging this may not be the case in the next 5+ years

Times they are a changin, I’ll continue to own the world and let it sort itself out based on my predetermined asset allocation / rebalance bands
lostdog
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Re: Ditching International

Post by lostdog »

BoggledHead2 wrote: Mon Jun 15, 2020 11:50 am It’s pretty incredible that people still dismiss International despite periods of time International has outperformed, as well as the changing global landscape

China/Asia are laying down infrastructure with manufacturing already in place to eventually became the world’s #1 economy ... but hey, US has been doing a lot better recently so why bother acknowledging this may not be the case in the next 5+ years

Times they are a changin, I’ll continue to own the world and let it sort itself out based on my predetermined asset allocation / rebalance bands
+1

Quotes from Rick Ferri regarding international:

viewtopic.php?f=10&t=315129&p=5271063#p5271063

"International vs. US is mostly about industry weights.

"You've heard for years that the US is "outsourcing manufacturing jobs overseas." Well, that shows up in industry weights. The US is heavy in the "gig" economy and health care. The rest of the world is heavy in manufacturing, energy, and materials. The performance of industry sectors rotates around over time. In the last ten years it was the former, in the ten years before that it was the later. The mystery is solved once you understand this.

Rick Ferri"

viewtopic.php?f=10&t=315129&p=5275390#p5275390

"US GDP is currently composed of different industries weights than it was 50 years ago. Manufacturing as a percentage of nominal GDP peaked in the early 1950s at about 27%, then started to decline as it became cheaper to manufacture overseas. We still use all the products manufactured overseas, and since we consume them, shouldn't we invest in the companies that make them as part of a diversified portfolio? I think so.

Rick Ferri"
asif408
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Re: Ditching International

Post by asif408 »

BoggledHead2 wrote: Mon Jun 15, 2020 11:50 am It’s pretty incredible that people still dismiss International despite periods of time International has outperformed, as well as the changing global landscape

China/Asia are laying down infrastructure with manufacturing already in place to eventually became the world’s #1 economy ... but hey, US has been doing a lot better recently so why bother acknowledging this may not be the case in the next 5+ years
I used to think that, but now not so much. As a whole, we Bogleheads aren't much different emotionally than the rest of the world in being short-sighted and chasing fads and trends.
Chuck107
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Re: Ditching International

Post by Chuck107 »

I am strictly US Vti and Bnd, as per my readings from Jack Bogle.

Not that he was all knowing, but that after reading I agreed.

There are MANY voices claiming the true path forward, Vanguard as well as those on this forum.
Who is right and who is wrong? No one really knows.

I believe in making my own mistakes, not someone else's. After deciding for myself I just tuned out all the Noise .

Will I do better with the flavor of the day? Or stick to my plan?
Time will tell.
Alas, I find moderation of this forum too restrictive for my tastes, farewell.
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