Long Suffering VXUS Holder No More

[Robot Monster]

The best printed example of my approach is the interview with Paul Tudor Jones in the book Money Master the Game (chapter 6.5). Let me try to summarize. You see a chart with the line going up. You are then asked the following question: How many of you want to be long and stay long on this chart? He also says: you always want to be with whatever the predominate trend is. And he also says: my metric for everything I look at is the 200 day moving average of closing prices. If you use the 200 day moving average rule, then you get out. Basically, check out that interview in the book. It's pretty much my investing style that I have landed on, and it works for me.

I think I’m starting to understand. So how off or downward does the 200 day moving average need to be for you to get out of a sector? Same question but in the other direction. How high does the 200 day moving average need to be before you jump into a sector? Is this any sector or are you being specific to just a handful?

This deserves its own thread, IMO. Doing a quick search, I did find an old thread entitled "200-day moving average market timing."

And,
"Don't Use the 200-Day Moving Average as a Sell Signal" - Ben Carlson
Source

As well as,
viewtopic.php?t=164526
viewtopic.php?t=10157

Also found,

Tony then asked Paul, “Since asset allocation is so important, let me ask you: If you couldn’t pass on any of your money to your kids, but only a specific portfolio and a set of principles to guide them, what would it be?”

Paul answered, “I get very nervous about the retail investor, the average investor, because it’s really, really hard. If this was easy, if there was one formula, one way to do it, we’d all be zillionaires. One principle for sure would get out of anything that falls below the 200-day moving average.”

Source

[rockstar]

Rockstar previously explained the reasoning for no international:


Source

“Invest what is working.” How do you know what is working until after the fact that it worked?

Isn’t investing into what has worked in the past called performance chasing?

Maybe I just don’t get what he or maybe you are trying to say.

I am actually struggling to understand rockstar's point of view, myself, and I believe I share your perspective more. But, I'm trying to be open minded, so...

Imagine if you were a farmer, and year after year Field A yields more crop than Field B. You decide, finally, that you're going to plant everything on Field A, since that's the better yielding field, and ignore Field B completely. How does that not make sense, when clearly Field A has demonstrated itself to be the superior field?

I think something like that is the mental mindset we're dealing with.

The best printed example of my approach is the interview with Paul Tudor Jones in the book Money Master the Game (chapter 6.5). Let me try to summarize. You see a chart with the line going up. You are then asked the following question: How many of you want to be long and stay long on this chart? He also says: you always want to be with whatever the predominate trend is. And he also says: my metric for everything I look at is the 200 day moving average of closing prices. If you use the 200 day moving average rule, then you get out. Basically, check out that interview in the book. It's pretty much my investing style that I have landed on, and it works for me.

I think I’m starting to understand. So how off or downward does the 200 day moving average need to be for you to get out of a sector? Same question but in the other direction. How high does the 200 day moving average need to be before you jump into a sector? Is this any sector or are you being specific to just a handful?

I still like the Boglehead way of buying a low cost ETF holding a large number of companies. However, what's trending isn't everything. The problem with my approach isn't selling when it breaks below the moving average. The problem is buying back into the market. This is where I see folks struggle and why buy and hold works for a lot of people. The thing is that I don't see international as a whole trending upward strongly. It's more like buying a volatile bond and clipping the coupon.

I personally use the 300 day moving average. I prefer to be in the market.

If you don't want to figure out what is trending, you can always look at ETFs like MTUM. You're paying someone else to figure this out for you. But it's a more passive way of looking at trending. Personally, I'm heavily in QQQ. But MTUM might be an alternative for me when I finally exit QQQ.

[trevorshhh]

I went with an 80-20 split on VTI to VXUS (and equivalents) after not being able to decide. I'm currently slowly going to 70-30 with new money, and kind of wishing I had just gone with VT. I decided I'm not good at deciding between US and international, so why not let the market decide for me?

I probably won't do VT directly since it's not available in all of my accounts, but I think I might try to approximate international market weight in the future.

[abuss368]

When I mentioned what I did and why to a Vanguard rep I expected to get a stern talking to, but to my surprise she said something like "Yeah, we've been re-looking at our recommendation to diversify with VXUS."

Wow! Are you kidding Vanguard said that? That could be huge news! Imagine they reduce international from 40% of stock and 30% of bond??? After they just projected outperformance in the literature!

Or offer US only funds!

[abuss368]

It think this is performance chasing, and one of the most dangerous things an investor can do. You should continue to hold international stocks, remain diversified, and not waver.

Also note that VXUS is selling for 17.7x earnings and VTSAX is selling for 27.5x earnings.

As Jack Bogle said “maybe there is a reason international stocks are that cheap”.

[abuss368]

International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing.

Holding onto your international investments, regardless of its recent returns, is not market timing in any way, shape, or form.

Agree. However it could be considered insanity!

[abuss368]

International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing.

Holding onto your international investments, regardless of its recent returns, is not market timing in any way, shape, or form.

Here's a rhetorical question. How many years of a fund underperforming does it take before it can be considered a bad investment compared to others?

It is like a direct property investment gone bad. Nuclear wasteland around of high crime, blight, lower cash flows and returns. It does not matter it’s cheap for a reason. It diversifies from US stocks. It does not matter there is underperformance.

Why would not not bail and buy a better property on other side of town.

Sometimes the dedication to international amazes me!

[abuss368]

I regret VXUS too. All new money (except dividends) will be directed to other investments.

This is the second thread this week.

People need protection from themselves from selling low and buying high or just giving up on it.

Giving into emotions and bad investing behavior is a mistake. What a joke.

Meh. The Two Fund Portfolio is an excellent choice. Investors are learning and catching on to simplifying. The good news is the Two Fund Portfolio will never be below average.

[abuss368]

When I mentioned what I did and why to a Vanguard rep I expected to get a stern talking to, but to my surprise she said something like "Yeah, we've been re-looking at our recommendation to diversify with VXUS."

If what she said is true, I wonder if Vanguard will start pushing their international active funds.

Maybe International Core Stock, with a 0.45% ER and -1.90% YTD performance¹ versus the benchmark.

Or Emerging Markets Select Stock, with a 0.93% ER and -3.12% 1YR performance¹ versus the benchmark.

Or International Growth, with a 0.43% ER and Tesla as the #2 holding.

[1] Despite having very familiar names from the index in the top 10 holdings.

This is where my thoughts are as well. There are some articles out there that active management may be better in international. That would be a huge shift for Vanguard!

[000]

This is where my thoughts are as well. There are some articles out there that active management may be better in international. That would be a huge shift for Vanguard!

It doesn't seem like Vanguard's active international funds have done much better recently though.

I'm not sure what they will start recommending over VXUS.

[abuss368]

OP here. Thanks for all the really thoughtful replies.

A little more background. We been with Vanguard 30+ years. We're nearing retirement and have a large amount of money in the market. So we don't need to chase return to feel comfortable with our savings level. I think that in part is why the Vanguard reps I have spoken to (more than one) were comfortable with with my decision. In response to a question above, the reps seemed comfortable with us staying in short term bonds funds for now.

And as to Vanguard reps simply being "agreeable," I have been the recipient of blunt negative comments from Vanguard reps in the past when deviating from the Vanguard way--which is one reason I like Vanguard.

I probably would be comfortable being a two-fund Vanguard investor (like a couple posters above), but I do want to look at diversification. That's why I started this thread. One of my issues with VXUS is that the diversification is so broad that it tends towards mediocre results.

"VXUS is selling for 17.7x earnings and VTSAX is selling for 27.5x earnings" (as stated above) is an argument that really cuts both ways.

Yes, I am aware of the various transparency, ethical, etc. issues involved with China, but in terms of balance (with the US market) and potential for growth it does seem like a China ETF is a good diversification move over the long run.

So much contradiction in this post...

OK, let me try again.

I'd like to come up with a long-term diversification plan that replaces VXUS in a three fund portfolio, with the other two funds being VTI and Total Bond.

I totally get "staying the course" but I am guessing that no one here is taking the position that once a plan is developed it cannot be changed until death, even if that is 50+ years later.

I think a plan to “death” is crazy. An investor can change at any time. Have you considered REITs or US High Dividend? Good long term results.

[abuss368]

I say that the world particularly Europe is becoming more and more socialist over the decades and socialism is bad for business. I suspect lower returns coming from those countries which will pull down the entire Ex-US market and it will continue to lag the US.

Denmark, Finland, Sweden and Norway have taken the best-in-the-world national stock market slots 6 out of the last 14 years. These are broadly considered some of the most socialist countries both in Europe and the world, and seem to be doing very well for themselves.

Source: https://www.fidelity.com/viewpoints/inv ... ting-myths

Not to get too political (really!) but US companies and stocks, and the economy in general, was among its best ever in the 1950's which was also in many ways our most socialist time period e.g. highly progressive tax rates, strong unions, high wages for blue collar work. I say this not to make the case for or against any particular combination of capitalism and socialism, but instead to point out that equities can do well outside of the rock bottom tax and regulation levels of the 90's to present.

Here is the exact problem with that chart and the best annual international stock exchanges: the best each year is completely drowned out by the entire rest of world. Too small and immaterial to move the needle and make a difference. I think that may be an issue with passive international investing.

[Artsdoctor]

In retrospect, why not just invest 100% of your assets in Total Market and call it a day?

These international threads are problematic but if you feel like bailing, just do it. International is complex because you have the markets and you have the foreign currency exchange. Too many moving pieces for a lot of people. I wish that every other year International "beat" domestic but it didn't. I also wish I'd get 5% interest on my bonds. There's a lot of things in retrospect I could have done differently. Won't there inevitably be winners and losers that you can't predict?

If you truly believe that the US is unique and it can't be beat from an investment point of view, just sell the International and be done with it.

And for what it's worth, I have no indication whatsoever that Vanguard is considering foregoing its international recommendations with anyone I've spoken to and their white papers wouldn't suggest it, but you never really know.

[Streptococcus]

Count me among those who buy lots of VXUS and plan on keeping it forever. For one thing, thread like these reinforce the idea that I should keep it. Last time I checked, US was still way overvalued compared to international.

I believe those who think that US stocks will have lower future returns compared to international. Just like a house in downtown San Francisco is likely to appreciate less in the future than a house in Raleigh NC. And to me, international might just be like small cap value. You need to ride an extended amount of time of underperformance to finally enjoy higher returns. I have the time and the patience to ride.

[abuss368]

Jack Bogle did write in The Little Book of Common Sense Investing that if anyone wants to invest in international that an index fund is the best way. Jack Bogle know more about investing than any of us and would best understand active v. passive international investing.

[daave]

Funny seeing this thread today, just this morning I rebalanced into ex-US.

Buy low, sell high, not the other way around!!

[Noobvestor]

I say that the world particularly Europe is becoming more and more socialist over the decades and socialism is bad for business. I suspect lower returns coming from those countries which will pull down the entire Ex-US market and it will continue to lag the US.

Denmark, Finland, Sweden and Norway have taken the best-in-the-world national stock market slots 6 out of the last 14 years. These are broadly considered some of the most socialist countries both in Europe and the world, and seem to be doing very well for themselves.

Source: https://www.fidelity.com/viewpoints/inv ... ting-myths

Not to get too political (really!) but US companies and stocks, and the economy in general, was among its best ever in the 1950's which was also in many ways our most socialist time period e.g. highly progressive tax rates, strong unions, high wages for blue collar work. I say this not to make the case for or against any particular combination of capitalism and socialism, but instead to point out that equities can do well outside of the rock bottom tax and regulation levels of the 90's to present.

Agreed. The US thrived, for instance, with higher and more progressive tax rates on high-income individuals and corporations. Income inequality doesn't just boost the wealthiest .01% into even wealthier positions, it drains the economy more broadly. At least, that's what the data shows. YMMV.

Anyone still thinking capitalism works as a trickle-down process hasn't watched income/wealth gap disparity for 50+ years ....

Anyway, it's sad to see people sell low to buy high, no matter the asset class. It pretty much always come back to haunt market timers. But what can you do - we're a greedy species, and chase returns, even when every rational argument runs contrary to our instincts.

My biggest beef is with the defenders of timed changes. If you never held international, power to you, stay your course, but please, for the sake of investors who are well-diversified globally, don't act like your 'anything from 0% to 50%' perspective is helpful - it just encourages market timing.

[spdoublebass]

OP here. Thanks for all the really thoughtful replies.

A little more background. We been with Vanguard 30+ years. We're nearing retirement and have a large amount of money in the market. So we don't need to chase return to feel comfortable with our savings level. I think that in part is why the Vanguard reps I have spoken to (more than one) were comfortable with with my decision. In response to a question above, the reps seemed comfortable with us staying in short term bonds funds for now.

And as to Vanguard reps simply being "agreeable," I have been the recipient of blunt negative comments from Vanguard reps in the past when deviating from the Vanguard way--which is one reason I like Vanguard.

I probably would be comfortable being a two-fund Vanguard investor (like a couple posters above), but I do want to look at diversification. That's why I started this thread. One of my issues with VXUS is that the diversification is so broad that it tends towards mediocre results.

"VXUS is selling for 17.7x earnings and VTSAX is selling for 27.5x earnings" (as stated above) is an argument that really cuts both ways.

Yes, I am aware of the various transparency, ethical, etc. issues involved with China, but in terms of balance (with the US market) and potential for growth it does seem like a China ETF is a good diversification move over the long run.

So much contradiction in this post...

OK, let me try again.

I'd like to come up with a long-term diversification plan that replaces VXUS in a three fund portfolio, with the other two funds being VTI and Total Bond.

I totally get "staying the course" but I am guessing that no one here is taking the position that once a plan is developed it cannot be changed until death, even if that is 50+ years later.

I think a plan to “death” is crazy. An investor can change at any time. Have you considered REITs or US High Dividend? Good long term results.

I think a plan to death is exactly what Bogle talked about. Stay the course. How can you quote Bogle repeatedly and say Bogle doesn't think you should stick to your investing plan from start to death?

I almost find your posts disrespectful to Mr. Bogle. He wasn't the ardent "two-funder" that you are trying to make him out to be. He didn't force his opinion on anyone like you are trying to do.

Bogle openly said to not take his advice on International. That you have to decide that one for yourself. Then he said stay the course with whatever you decide.

Bogle added corporate bonds to TBM, held Wellington fund (which has international), timed the market, talked about funny money.

I am not an advanced investor, but if I were unsatisfied with my international, I would not sell it when its low. I would hold on to it. I would change what I buy with new money only. Again, that's if I wanted to make a change. If you bail on it and sell international when it's low, and then buy TSM with it at all time highs, it makes absolutely no sense to me. Yet, this is exactly what would be applauded by the Two Fund thread. I don't think Bogle would approve of that at all.

[rossington]

So a question to seriously consider is if in the OP's post we substituted an underperforming single stock such as GE or XOM would the consensus not be to sell it and move on?
It seems the same rationale should be applied to poorly performing International ETF's and mutual funds.

Status Quo Bias?

[spdoublebass]

So a question to seriously consider is if in the OP's post we substituted an underperforming single stock such as GE or XOM would the consensus not be to sell it and move on?
It seems the same rationale should be applied to poorly performing International ETF's and mutual funds.

Status Quo Bias?

I don’t think it works that way because VTI and VXUS are market weight. They will never underperform because they are the market.

Takes Sears. If you held Sears as an individual stock, you might get out of it, but you didn’t even notice it went down in VTI.

If you hold VT, you don’t realize which is performing better between US and INT.

[000]

So a question to seriously consider is if in the OP's post we substituted an underperforming single stock such as GE or XOM would the consensus not be to sell it and move on?
It seems the same rationale should be applied to poorly performing International ETF's and mutual funds.

Status Quo Bias?

If a person held a diversified portfolio of individual stocks, should they sell GE or XOM low and just keep the rest?

[bltn]

These threads, while somewhat painful to read, are always interesting to me. They represent excellent examples of the fact that some people just don’t have the right DNA to be good investors. Fortunately, there are many attributes that are associated with building wealth. Some people can make quite a few behavioral errors in their investing career and still make it out just fine.

Isn t this the truth!

From personal experience I know that a high savings rate is more important than an optimal investment plan. Whatever that is.

[chipperd]

So much market timing discussion, so little time.

[abuss368]

OP here. Thanks for all the really thoughtful replies.

A little more background. We been with Vanguard 30+ years. We're nearing retirement and have a large amount of money in the market. So we don't need to chase return to feel comfortable with our savings level. I think that in part is why the Vanguard reps I have spoken to (more than one) were comfortable with with my decision. In response to a question above, the reps seemed comfortable with us staying in short term bonds funds for now.

And as to Vanguard reps simply being "agreeable," I have been the recipient of blunt negative comments from Vanguard reps in the past when deviating from the Vanguard way--which is one reason I like Vanguard.

I probably would be comfortable being a two-fund Vanguard investor (like a couple posters above), but I do want to look at diversification. That's why I started this thread. One of my issues with VXUS is that the diversification is so broad that it tends towards mediocre results.

"VXUS is selling for 17.7x earnings and VTSAX is selling for 27.5x earnings" (as stated above) is an argument that really cuts both ways.

Yes, I am aware of the various transparency, ethical, etc. issues involved with China, but in terms of balance (with the US market) and potential for growth it does seem like a China ETF is a good diversification move over the long run.

So much contradiction in this post...

OK, let me try again.

I'd like to come up with a long-term diversification plan that replaces VXUS in a three fund portfolio, with the other two funds being VTI and Total Bond.

I totally get "staying the course" but I am guessing that no one here is taking the position that once a plan is developed it cannot be changed until death, even if that is 50+ years later.

I think a plan to “death” is crazy. An investor can change at any time. Have you considered REITs or US High Dividend? Good long term results.

I think a plan to death is exactly what Bogle talked about. Stay the course. How can you quote Bogle repeatedly and say Bogle doesn't think you should stick to your investing plan from start to death?

I almost find your posts disrespectful to Mr. Bogle. He wasn't the ardent "two-funder" that you are trying to make him out to be. He didn't force his opinion on anyone like you are trying to do.

Bogle openly said to not take his advice on International. That you have to decide that one for yourself. Then he said stay the course with whatever you decide.

Bogle added corporate bonds to TBM, held Wellington fund (which has international), timed the market, talked about funny money.

I am not an advanced investor, but if I were unsatisfied with my international, I would not sell it when its low. I would hold on to it. I would change what I buy with new money only. Again, that's if I wanted to make a change. If you bail on it and sell international when it's low, and then buy TSM with it at all time highs, it makes absolutely no sense to me. Yet, this is exactly what would be applauded by the Two Fund thread. I don't think Bogle would approve of that at all.

Interesting noted about Jack Bogle saying hold to death. Would you please share a source or link to an article or interview?

Jack Bogle recommended Total Stock and Total Bond in essentially every article and interview.

[z3r0c00l]

So a question to seriously consider is if in the OP's post we substituted an underperforming single stock such as GE or XOM would the consensus not be to sell it and move on?
It seems the same rationale should be applied to poorly performing International ETF's and mutual funds.

Status Quo Bias?

If a person held a diversified portfolio of individual stocks, should they sell GE or XOM low and just keep the rest?

The only properly diversified portfolio of individual stocks is one that contains the market in market weight, that is an index mutual fund. So they should sell those individual stocks not because they have done poorly or well, but because owning individual stocks is a gamble likely to hurt you in the long run. That's why we tell people to sell individual stocks around here, because the mistake was concentrating your life savings into a few risky bets, not making those risky bets on the wrong horse. I would be even more apt to tell someone who got lucky on Apple or Tesla to sell now.

Your example nicely (but perhaps accidentally) reminds us that deciding you only need to own stocks from a single country is not unlike deciding you only need a few stocks rather than a broad sampling of the entire domestic market.

[000]

The only properly diversified portfolio of individual stocks is one that contains the market in market weight, that is an index mutual fund. So they should sell those individual stocks not because they have done poorly or well, but because owning individual stocks is a gamble likely to hurt you in the long run.

Sorry, I strongly disagree with this sentiment. Not everyone needs to hold the exact same stock portfolio. Tilting away from a sector in which one works or is invested in an unlisted business is just one of many possibly good reasons not to hold the "market portfolio".

[z3r0c00l]

The only properly diversified portfolio of individual stocks is one that contains the market in market weight, that is an index mutual fund. So they should sell those individual stocks not because they have done poorly or well, but because owning individual stocks is a gamble likely to hurt you in the long run.

Sorry, I strongly disagree with this sentiment. Not everyone needs to hold the exact same stock portfolio. Tilting away from a sector in which one works or is invested in an unlisted business is just one of many possibly good reasons not to hold the "market portfolio".

For sure, if you own shares in a private business or want to tilt away from airlines or cruise ships because your job depends on it, I get that idea. Perhaps this is most relevant to those 5-6 percent of Americans (and dropping) who work in oil/gas in which case it is a big employer and a relatively big set of companies by market cap. They could still get a fossil fuel free fund rather than try and pick stocks which is more dangerous, imho, than just taking a bit of an extra energy exposure in an index.

[Olemiss540]

This thread exemplifies the extreme value to holding target retirement index funds even for the well read investors among us chasing alpha.

Has international outperformed this year? I honestly have no idea. My ability to grow wealth is strongly associated with my personal savings rate and not making serious behavioral mistakes in my investment portfolio than the alpha portfolio management might create.

[asif408]

Perhaps this is most relevant to those 5-6 percent of Americans (and dropping) who work in oil/gas in which case it is a big employer and a relatively big set of companies by market cap.

Agreed. But definitely not applicable to tech workers, since we all know tech is the future and is never going away, and the top 5 companies are only about 50% of the index, unlike energy where the top 5 companies are 52% of the index.

[burritoLover]

It's kind of ironic that some investors who buy into the idea that index funds are superior to actively managed funds can also be the same investors who actively trade into and out of index funds to chase performance.

[spdoublebass]

So much contradiction in this post...

OK, let me try again.

I'd like to come up with a long-term diversification plan that replaces VXUS in a three fund portfolio, with the other two funds being VTI and Total Bond.

I totally get "staying the course" but I am guessing that no one here is taking the position that once a plan is developed it cannot be changed until death, even if that is 50+ years later.

I think a plan to “death” is crazy. An investor can change at any time. Have you considered REITs or US High Dividend? Good long term results.

I think a plan to death is exactly what Bogle talked about. Stay the course. How can you quote Bogle repeatedly and say Bogle doesn't think you should stick to your investing plan from start to death?

I almost find your posts disrespectful to Mr. Bogle. He wasn't the ardent "two-funder" that you are trying to make him out to be. He didn't force his opinion on anyone like you are trying to do.

Bogle openly said to not take his advice on International. That you have to decide that one for yourself. Then he said stay the course with whatever you decide.

Bogle added corporate bonds to TBM, held Wellington fund (which has international), timed the market, talked about funny money.

I am not an advanced investor, but if I were unsatisfied with my international, I would not sell it when its low. I would hold on to it. I would change what I buy with new money only. Again, that's if I wanted to make a change. If you bail on it and sell international when it's low, and then buy TSM with it at all time highs, it makes absolutely no sense to me. Yet, this is exactly what would be applauded by the Two Fund thread. I don't think Bogle would approve of that at all.

Interesting noted about Jack Bogle saying hold to death. Would you please share a source or link to an article or interview?

Jack Bogle recommended Total Stock and Total Bond in essentially every article and interview.

Google and find any article with Bogle. He says stay the course.Don’t just do something, stand there. Are you saying that he really meant only when it’s working? Or Up? You really think he meant the opposite of his sayings?

[z3r0c00l]

Perhaps this is most relevant to those 5-6 percent of Americans (and dropping) who work in oil/gas in which case it is a big employer and a relatively big set of companies by market cap.

Agreed. But definitely not applicable to tech workers, since we all know tech is the future and is never going away, and the top 5 companies are only about 50% of the index, unlike energy where the top 5 companies are 52% of the index.

No, technology isn't going anywhere. It has been the single key driver of social an economic progress since the advent of civilization. Are you saying a Google employee should avoid Google stock? If they hold it at market cap, it won't be such a big difference anyway. In an Enron scenario you lose your job and what, a few percent of your mutual fund temporarily until someone replaces google? I doubt that blip in the investments will even matter in light of the job loss. And anyway, who is relying on stocks to cover a job loss?

I am surprised to hear that 5 stocks 50% stat, since the top 10 stocks in my US mutual fund account for 25% of the index. And what's more, I don't see a major correlation between all of these stocks. One sells computer hardware, one is in online retail, one is in advertising, etc.

[csmath]

It's kind of ironic that some investors who buy into the idea that index funds are superior to actively managed funds can also be the same investors who actively trade into and out of index funds to chase performance.

I see what you are saying but I would wager that the majority of people here believe that "index funds are superior to actively managed funds" due to one of the most fundamental Boglehead beliefs, costs matter.

[burritoLover]

It's kind of ironic that some investors who buy into the idea that index funds are superior to actively managed funds can also be the same investors who actively trade into and out of index funds to chase performance.

I see what you are saying but I would wager that the majority of people here believe that "index funds are superior to actively managed funds" due to one of the most fundamental Boglehead beliefs, costs matter.

I'm sure to that end, selling low, buying high could also be considered a "cost".

[abuss368]

OK, let me try again.

I'd like to come up with a long-term diversification plan that replaces VXUS in a three fund portfolio, with the other two funds being VTI and Total Bond.

I totally get "staying the course" but I am guessing that no one here is taking the position that once a plan is developed it cannot be changed until death, even if that is 50+ years later.

I think a plan to “death” is crazy. An investor can change at any time. Have you considered REITs or US High Dividend? Good long term results.

I think a plan to death is exactly what Bogle talked about. Stay the course. How can you quote Bogle repeatedly and say Bogle doesn't think you should stick to your investing plan from start to death?

I almost find your posts disrespectful to Mr. Bogle. He wasn't the ardent "two-funder" that you are trying to make him out to be. He didn't force his opinion on anyone like you are trying to do.

Bogle openly said to not take his advice on International. That you have to decide that one for yourself. Then he said stay the course with whatever you decide.

Bogle added corporate bonds to TBM, held Wellington fund (which has international), timed the market, talked about funny money.

I am not an advanced investor, but if I were unsatisfied with my international, I would not sell it when its low. I would hold on to it. I would change what I buy with new money only. Again, that's if I wanted to make a change. If you bail on it and sell international when it's low, and then buy TSM with it at all time highs, it makes absolutely no sense to me. Yet, this is exactly what would be applauded by the Two Fund thread. I don't think Bogle would approve of that at all.

Interesting noted about Jack Bogle saying hold to death. Would you please share a source or link to an article or interview?

Jack Bogle recommended Total Stock and Total Bond in essentially every article and interview.

Google and find any article with Bogle. He says stay the course.Don’t just do something, stand there. Are you saying that he really meant only when it’s working? Or Up? You really think he meant the opposite of his sayings?

Agree on that as it is very well known. What I have never heard Jack use are the words “until death”. That was my question.

[lostdog]

I think a plan to “death” is crazy. An investor can change at any time. Have you considered REITs or US High Dividend? Good long term results.

I think a plan to death is exactly what Bogle talked about. Stay the course. How can you quote Bogle repeatedly and say Bogle doesn't think you should stick to your investing plan from start to death?

I almost find your posts disrespectful to Mr. Bogle. He wasn't the ardent "two-funder" that you are trying to make him out to be. He didn't force his opinion on anyone like you are trying to do.

Bogle openly said to not take his advice on International. That you have to decide that one for yourself. Then he said stay the course with whatever you decide.

Bogle added corporate bonds to TBM, held Wellington fund (which has international), timed the market, talked about funny money.

I am not an advanced investor, but if I were unsatisfied with my international, I would not sell it when its low. I would hold on to it. I would change what I buy with new money only. Again, that's if I wanted to make a change. If you bail on it and sell international when it's low, and then buy TSM with it at all time highs, it makes absolutely no sense to me. Yet, this is exactly what would be applauded by the Two Fund thread. I don't think Bogle would approve of that at all.

Interesting noted about Jack Bogle saying hold to death. Would you please share a source or link to an article or interview?

Jack Bogle recommended Total Stock and Total Bond in essentially every article and interview.

Google and find any article with Bogle. He says stay the course.Don’t just do something, stand there. Are you saying that he really meant only when it’s working? Or Up? You really think he meant the opposite of his sayings?

Agree on that as it is very well known. What I have never heard Jack use are the words “until death”. That was my question.

I agree with spdoublebass. Promoting an un-diversified portfolio just for the reason of appealing to authority is bad advice. It's important for members to continue to challenge you on this subject so novice investors have a choice in the matter.

[abuss368]

I think a plan to death is exactly what Bogle talked about. Stay the course. How can you quote Bogle repeatedly and say Bogle doesn't think you should stick to your investing plan from start to death?

I almost find your posts disrespectful to Mr. Bogle. He wasn't the ardent "two-funder" that you are trying to make him out to be. He didn't force his opinion on anyone like you are trying to do.

Bogle openly said to not take his advice on International. That you have to decide that one for yourself. Then he said stay the course with whatever you decide.

Bogle added corporate bonds to TBM, held Wellington fund (which has international), timed the market, talked about funny money.

I am not an advanced investor, but if I were unsatisfied with my international, I would not sell it when its low. I would hold on to it. I would change what I buy with new money only. Again, that's if I wanted to make a change. If you bail on it and sell international when it's low, and then buy TSM with it at all time highs, it makes absolutely no sense to me. Yet, this is exactly what would be applauded by the Two Fund thread. I don't think Bogle would approve of that at all.

Interesting noted about Jack Bogle saying hold to death. Would you please share a source or link to an article or interview?

Jack Bogle recommended Total Stock and Total Bond in essentially every article and interview.

Google and find any article with Bogle. He says stay the course.Don’t just do something, stand there. Are you saying that he really meant only when it’s working? Or Up? You really think he meant the opposite of his sayings?

Agree on that as it is very well known. What I have never heard Jack use are the words “until death”. That was my question.

I agree with spdoublebass. Promoting an un-diversified portfolio just for the reason of appealing to authority is bad advice. It's important for members to continue to challenge you on this subject so novice investors have a choice in the matter.

I agree. We are helping investors one at a time transition to the Two Fund Portfolio. Many investors are realizing simplicity wins!

[spdoublebass]

Interesting noted about Jack Bogle saying hold to death. Would you please share a source or link to an article or interview?

Jack Bogle recommended Total Stock and Total Bond in essentially every article and interview.

Google and find any article with Bogle. He says stay the course.Don’t just do something, stand there. Are you saying that he really meant only when it’s working? Or Up? You really think he meant the opposite of his sayings?

Agree on that as it is very well known. What I have never heard Jack use are the words “until death”. That was my question.

I agree with spdoublebass. Promoting an un-diversified portfolio just for the reason of appealing to authority is bad advice. It's important for members to continue to challenge you on this subject so novice investors have a choice in the matter.

I agree. We are help investors one at a time transition to the Two Fund Portfolio. Many investors are realizing simplicity wins!

Right, you are advising against Taylor Larimore’s book Bogleheads’ Guide to Investing. I know. Even on your two fund thread I’ve never seen Mr. Larimore advise someone to sell their international funds. He’s said you can have 0%. But he has never advised someone to not stay the course nor has he made an addendum to his book. I know what he has in his portfolio, I understand he uses two funds. I also understand that he held on to his international and never never bought more of it, eventually selling it off. That is completely different than what you are advising people to do.

Nobody has an issue with you being 100% US. I don’t. I have an issue with you acting as an advisor to new members telling them to sell low buy high instead of Bogle’s advise to stay the course. Stay the course is something I’ve never heard Mr. Larimore or Bogle stray from.

[Steve Reading]

International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing.

Holding onto your international investments, regardless of its recent returns, is not market timing in any way, shape, or form.

Agree. However it could be considered insanity!

Holding onto your international investments, regardless of its recent returns, is not insane in any way, shape, or form.

Sometimes the dedication to international amazes me!

Well, we are dedicated to buying the haystack. We are not interested in looking for the company, sector or country that will outperform. We buy them all, tune out the noise from those who want to buy whatever is the hottest, best performing investment recently, and stay the course.

[abuss368]

International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing.

Holding onto your international investments, regardless of its recent returns, is not market timing in any way, shape, or form.

Agree. However it could be considered insanity!

Holding onto your international investments, regardless of its recent returns, is not insane in any way, shape, or form.

Sometimes the dedication to international amazes me!

Well, we are dedicated to buying the haystack. We are not interested in looking for the company, sector or country that will outperform. We buy them all, tune out the noise from those who want to buy whatever is the hottest, best performing investment recently, and stay the course.

Fair enough Steve. So do you invest in both international stocks and international bonds?

[Steve Reading]

International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing.

Holding onto your international investments, regardless of its recent returns, is not market timing in any way, shape, or form.

Agree. However it could be considered insanity!

Holding onto your international investments, regardless of its recent returns, is not insane in any way, shape, or form.

Sometimes the dedication to international amazes me!

Well, we are dedicated to buying the haystack. We are not interested in looking for the company, sector or country that will outperform. We buy them all, tune out the noise from those who want to buy whatever is the hottest, best performing investment recently, and stay the course.

Fair enough Steve. So do you invest in both international stocks and international bonds?

I don't invest in bonds at all (be it international or domestic) currently. Bonds are less volatile so not diversifying them is unlikely to be a big mistake. You could just buy Australian bonds your whole life and likely be just fine. Stocks are far more volatile and uncertain, so stock global diversification is of far greater importance.

That said, diversifying into International bonds is pretty cheap and easy, so it's a no-brainer in my book.

[pascalwager]

Personally, I don't think simplicity is a legitimate goal if it requires selling low and buying high.

[Chicken Little]

What do you think?

1. It sounds like you bought high, and sold low. In other words, it sounds like you made the worst mistake.

2. I don't disagree with anyone avoiding international, and there are many genuine reasons to do so, particularly governance. To trim developed international and to fire into Chinese markets? I can't find a logical tether between those two concepts.

3. Basically, what I think is you can copy your original post. If international outperforms for the next 5-10 years, you can swap VTI for VXUS and paste.

[Chicken Little]

We are help investors one at a time transition to the Two Fund Portfolio.

To serve your mission better, I think what you really want to do is prevent investors from investing in international in the first place. I'm not so sure about the transitioning advice.

[Chicken Little]

Everybody quotes Raymond, and then they go on to tell you the future?

I told everybody that US schools would close back in February.

I think if you're going to tell people the future, you owe it to them to be correct.

[abuss368]

Everybody quotes Raymond, and then they go on to tell you the future?

I told everybody that US schools would close back in February.

I think if you're going to tell people the future, you owe it to them to be correct.

I hope you shorted the market in February and did well performance wise!

[Chicken Little]

I hope you shorted the market in February and did well performance wise!

What I did in February and March (and leading up to that) is in the record.

[RadAudit]

An earlier poster (Actin?) to this thread asked:

"International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing."

Excellent observation for almost any investment. What's the universally approved holding period?

[abuss368]

I hope you shorted the market in February and did well performance wise!

What I did in February and March (and leading up to that) is in the record.

[burritoLover]

An earlier poster (Actin?) to this thread asked:

"International investing is a catch 22. It has underperformed the past 13 years, so anyone that dumps it is performance chasing and if you're holding it because you think it's going to change, you're market timing."

Excellent observation for almost any investment. What's the universally approved holding period?

The hardest thing for DIY investors to get is that making changes to your investment strategy based on your portfolio's past returns (no matter what the time frame) is a loser's game. Investor A who is constantly tweaking their portfolio based on performance - such as decreasing exposure to underperforming assets and moving between the latest slice-and-dice fad is going to get absolutely destroyed in the long-run by Investor B, the buy and hold investor who keeps the same allocation of a 3-fund portfolio and uses only a time or band-based rebalance.