Jack Bogle - Two Fund Portfolio

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goonie
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Re: Jack Bogle - Two Fund Portfolio

Post by goonie »

Taylor Larimore wrote: Mon May 10, 2021 8:00 pm
goonie wrote:That article is from 6 years ago.
The wonderful thing about Jack Bogle is that his advice is timeless!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I would say, go into the casino, which is what Wall Street is today. Bet on the entire stock market and then get out of the casino and never show yourself there again.”
I pointed that out because it was asked if this was just bumping the thread with old news to keep it on the front page.
Northern Flicker
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

Taylor Larimore wrote: Mon May 10, 2021 8:00 pm
The wonderful thing about Jack Bogle is that his advice is timeless!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I would say, go into the casino, which is what Wall Street is today. Bet on the entire stock market and then get out of the casino and never show yourself there again.”
Certainly, that advice would apply equally well to both US-only and globally diversified equity portfolios. VXUS, VEA, and VWO are all total market index funds just as VTI is.

Another timeless piece of advice from Mr. Bogle, and something he could not have been more clear about, was the importance of staying the course.
Last edited by Northern Flicker on Tue May 11, 2021 7:48 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by DB2 »

abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
I see it more as being generational. Younger investors on this forum seem very open to international where as older investors less so and in some cases dumping or minimizing it.

Institutions (Vanguard, etc.) absolutely moving more into international.
Triple digit golfer
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

Da5id wrote: Mon May 10, 2021 7:26 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.
Ah performance chasing. Nothing says bogleheads quite like it.
This whole thread is about performance chasing. It isn't about simplicity because Total World or a three fund portfolio is just as simple. It isn't about staying the course because, well, we all know what happened there.
BabaWawa
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Re: Jack Bogle - Two Fund Portfolio

Post by BabaWawa »

abuss368 wrote: Sun May 09, 2021 10:22 pm
Northern Flicker wrote: Sun May 09, 2021 9:51 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
It is used by some BHs, but they are in the minority, and at least one prominent BH who advocated very unambiguously for 20% as the correct amount, subsequently sold out of int'l equities.
If you are referring to Taylor, he did explain that the amount in Total International was small. I believe he took a distribution and closed the account.

Tony
Tony, it wasn't quite that simple. Taylor admits to selling International when needing money for living expenses. In the ultimate letting the tax tail wag the dog, Taylor chose to liquidate taxable positions in International because during the periods of international underperformance, it was more tax efficient to sell his positions with lowest gains. That certainly fits with the concept of this thread...abandon anything in your chosen allocation with recent poor performance and put it all in positions with best performance. Sorry, but that's not what Jack Bogle taught me.
BabaWawa
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Re: Jack Bogle - Two Fund Portfolio

Post by BabaWawa »

abuss368 wrote: Sun May 09, 2021 9:19 pm
vineviz wrote: Sun May 09, 2021 8:30 pm
mikejuss wrote: Sun May 09, 2021 8:00 pm
vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
That does not appear to be true for one thing.

And it’d be a terrible way to build a portfolio if it were true.
REITs are included in Total Stock at market weight.

Tony
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
BabaWawa
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Re: Jack Bogle - Two Fund Portfolio

Post by BabaWawa »

abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
Wow, there's a great lesson for new Bogleheads: "spend your time here learning about asset allocation, low cost index investing, and staying the course and when part of your plan doesn't perform get rid of it."
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

DB2 wrote: Tue May 11, 2021 2:48 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
I see it more as being generational. Younger investors on this forum seem very open to international where as older investors less so and in some cases dumping or minimizing it.

Institutions (Vanguard, etc.) absolutely moving more into international.
While that is probably true of cryptocurrency speculations and tech sector tilts (older investors often have seen enough speculative bubbles and hot sectors in the present that turn cold in the future not to be lured in), I think older US investors who lived through the US inflation of the 1970's may be more likely to understand the importance of int'l diversification. Certainly, that was an important investing lesson of the 1970's for US investors.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Northern Flicker wrote: Tue May 11, 2021 5:41 pm
DB2 wrote: Tue May 11, 2021 2:48 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
I see it more as being generational. Younger investors on this forum seem very open to international where as older investors less so and in some cases dumping or minimizing it.

Institutions (Vanguard, etc.) absolutely moving more into international.
While that is probably true of cryptocurrency speculations and tech sector tilts (older investors often have seen enough speculative bubbles and hot sectors in the present that turn cold in the future not to be lured in), I think older US investors who lived through the US inflation of the 1970's may be more likely to understand the importance of int'l diversification. Certainly, that was an important investing lesson of the 1970's for US investors.
I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Da5id wrote: Tue May 11, 2021 6:22 pm
abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

anon_investor wrote: Tue May 11, 2021 6:51 pm
Da5id wrote: Tue May 11, 2021 6:22 pm
abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
That is fair enough. I just found his present tense "I am not so sure older investors want international diversification as much as younger investors." an odd formulation for that. I'm maybe not "older" (50s), but didn't add international until 2016 or so despite owning index funds since the early 90s.
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

BabaWawa wrote: Tue May 11, 2021 4:17 pm
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
He can try, but I suspect the facts might get in the way of his argument.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by DB2 »

Northern Flicker wrote: Tue May 11, 2021 5:41 pm
DB2 wrote: Tue May 11, 2021 2:48 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
I see it more as being generational. Younger investors on this forum seem very open to international where as older investors less so and in some cases dumping or minimizing it.

Institutions (Vanguard, etc.) absolutely moving more into international.
While that is probably true of cryptocurrency speculations and tech sector tilts (older investors often have seen enough speculative bubbles and hot sectors in the present that turn cold in the future not to be lured in), I think older US investors who lived through the US inflation of the 1970's may be more likely to understand the importance of int'l diversification. Certainly, that was an important investing lesson of the 1970's for US investors.
I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Tue May 11, 2021 7:02 pm
BabaWawa wrote: Tue May 11, 2021 4:17 pm
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
He can try, but I suspect the facts might get in the way of his argument.
Hi Vince -

I am confused. You had said earlier that Jack Bogle, David Swensen, William Bernstein were incorrect. Now Rick Ferri is incorrect?

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

abuss368 wrote: Tue May 11, 2021 8:07 pm
vineviz wrote: Tue May 11, 2021 7:02 pm
BabaWawa wrote: Tue May 11, 2021 4:17 pm
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
He can try, but I suspect the facts might get in the way of his argument.
Hi Vince -

I am confused. You had said earlier that Jack Bogle, David Swensen, William Bernstein were incorrect. Now Rick Ferri is incorrect?

Tony
Everyone is incorrect! Nobody knows nothing! :twisted: :sharebeer
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

abuss368 wrote: Tue May 11, 2021 8:07 pm
vineviz wrote: Tue May 11, 2021 7:02 pm
BabaWawa wrote: Tue May 11, 2021 4:17 pm
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
He can try, but I suspect the facts might get in the way of his argument.
Hi Vince -

I am confused. You had said earlier that Jack Bogle, David Swensen, William Bernstein were incorrect. Now Rick Ferri is incorrect?

Tony
It is very likely that all of those people have been wrong about something.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

anon_investor wrote: Tue May 11, 2021 8:09 pm
abuss368 wrote: Tue May 11, 2021 8:07 pm
vineviz wrote: Tue May 11, 2021 7:02 pm
BabaWawa wrote: Tue May 11, 2021 4:17 pm
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
He can try, but I suspect the facts might get in the way of his argument.
Hi Vince -

I am confused. You had said earlier that Jack Bogle, David Swensen, William Bernstein were incorrect. Now Rick Ferri is incorrect?

Tony
Everyone is incorrect! Nobody knows nothing! :twisted: :sharebeer
Sgt Schultz!
😆😆
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Triple digit golfer wrote: Tue May 11, 2021 8:12 pm
abuss368 wrote: Tue May 11, 2021 8:07 pm
vineviz wrote: Tue May 11, 2021 7:02 pm
BabaWawa wrote: Tue May 11, 2021 4:17 pm
Talk to Rick Ferri, he'll be happy to explain to you how real estate is significantly underrepresented in broad market indices.
He can try, but I suspect the facts might get in the way of his argument.
Hi Vince -

I am confused. You had said earlier that Jack Bogle, David Swensen, William Bernstein were incorrect. Now Rick Ferri is incorrect?

Tony
It is very likely that all of those people have been wrong about something.
That was priceless! 😂😂😆
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by RJC »

anon_investor wrote: Tue May 11, 2021 6:51 pm
Da5id wrote: Tue May 11, 2021 6:22 pm
abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
This is where my head is at as well. Will a 20% allocation to international even make a difference at this point after all these years of staying the course?
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

DB2 wrote: Tue May 11, 2021 7:42 pm I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
The tendency of some demographic groups to exhibit a stronger home bias is pretty well documented.
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.
https://www0.gsb.columbia.edu/mygsb/fac ... sified.pdf
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

RJC wrote: Tue May 11, 2021 8:15 pm
anon_investor wrote: Tue May 11, 2021 6:51 pm
Da5id wrote: Tue May 11, 2021 6:22 pm
abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
This is where my head is at as well. Will a 20% allocation to international even make a difference at this point after all these years of staying the course?
Exactly. No difference and the horrible performance has many people questioning the need and making changes.

If you are 40% stock and 60% bond and allocate 20% of stocks to international, that is only 8%.

MEANINGLESS!

Invest in what we know (US) and works. We work here. We live here. We spend here. We follow laws here. We pay taxes here. We will retire here. Invest here!

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Tue May 11, 2021 8:17 pm
DB2 wrote: Tue May 11, 2021 7:42 pm I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
The tendency of some demographic groups to exhibit a stronger home bias is pretty well documented.
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.
https://www0.gsb.columbia.edu/mygsb/fac ... sified.pdf
Vince -

I believe Vanguard has a study showing most folks, if they chose to invest in international, only allocate 20% or less. I think it went down with age or fluctuated. Have you read this or know where it is located? Then we can post well documented study.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

RJC wrote: Tue May 11, 2021 8:15 pm This is where my head is at as well. Will a 20% allocation to international even make a difference at this point after all these years of staying the course?
It'll make more difference than a 0% allocation, for sure.

Historically, allocating 20% or 25% to international stocks was enough to boost retirement income by 10% or more in the most challenging investing environments.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

abuss368 wrote: Tue May 11, 2021 8:20 pm I believe Vanguard has a study showing most folks, if they chose to invest in international, only allocate 20% or less. I think it went down with age or fluctuated. Have you read this or know where it is located? Then we can post well documented study.
I just posted a link to a "well documented study" that is worth reading.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Tue May 11, 2021 8:22 pm
abuss368 wrote: Tue May 11, 2021 8:20 pm I believe Vanguard has a study showing most folks, if they chose to invest in international, only allocate 20% or less. I think it went down with age or fluctuated. Have you read this or know where it is located? Then we can post well documented study.
I just posted a link to a "well documented study" that is worth reading.
Vince -

Let’s find the Vanguard one so we have more than one study to support our views. I’ll see if I can locate and copy.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Tue May 11, 2021 8:18 pm
RJC wrote: Tue May 11, 2021 8:15 pm
anon_investor wrote: Tue May 11, 2021 6:51 pm
Da5id wrote: Tue May 11, 2021 6:22 pm
abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
This is where my head is at as well. Will a 20% allocation to international even make a difference at this point after all these years of staying the course?
Exactly. No difference and the horrible performance has many people questioning the need and making changes.

If you are 40% stock and 60% bond and allocate 20% of stocks to international, that is only 8%.

MEANINGLESS!

Invest in what we know (US) and works. We work here. We live here. We spend here. We follow laws here. We pay taxes here. We will retire here. Invest here!

Tony
Saying things in all caps doesn't add to the persuasiveness. At least it tends to make me doubt the person has a strong case and is resorting to shouting.

Regardless of the total amount of stock, adding 20% international decreases volatility. You get about half the maximum benefit at 20% int'l according to the Vanguard white paper on int'l investing.

Mentioning the poorer past performance of international appears to be encouraging performance chasing, which is a common refrain in this thread.

Appeals to US nationalism also seems like an emotional rather than a rational appeal.

Pretty content free post. IMO of course.
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

abuss368 wrote: Tue May 11, 2021 8:23 pm Let’s find the Vanguard one so we have more than one study to support our views. I’ll see if I can locate and copy.
There are literally volumes of studies, all validated and peer-reviewed, which will tell you the same thing: international diversification is a proven and prudent investment technique.

None of Vanguard's LifeStrategy or Target Retirement funds put less than 40% of their equity allocation into international stocks. Do you REALLY think you're going to find a Vanguard white paper which concludes with "never mind, you don't need diversification"?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

Da5id wrote: Tue May 11, 2021 8:30 pm
abuss368 wrote: Tue May 11, 2021 8:18 pm
RJC wrote: Tue May 11, 2021 8:15 pm
anon_investor wrote: Tue May 11, 2021 6:51 pm
Da5id wrote: Tue May 11, 2021 6:22 pm

So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
This is where my head is at as well. Will a 20% allocation to international even make a difference at this point after all these years of staying the course?
Exactly. No difference and the horrible performance has many people questioning the need and making changes.

If you are 40% stock and 60% bond and allocate 20% of stocks to international, that is only 8%.

MEANINGLESS!

Invest in what we know (US) and works. We work here. We live here. We spend here. We follow laws here. We pay taxes here. We will retire here. Invest here!

Tony
Saying things in all caps doesn't add to the persuasiveness. At least it tends to make me doubt the person has a strong case and is resorting to shouting.

Regardless of the total amount of stock, adding 20% international decreases volatility. You get about half the maximum benefit at 20% int'l according to the Vanguard white paper on int'l investing.

Mentioning the poorer past performance of international appears to be encouraging performance chasing, which is a common refrain in this thread.

Appeals to US nationalism also seems like an emotional rather than a rational appeal.

Pretty content free post. IMO of course.
Good post, and all true.
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Re: Jack Bogle - Two Fund Portfolio

Post by BabaWawa »

abuss368 wrote: Tue May 11, 2021 8:23 pm
vineviz wrote: Tue May 11, 2021 8:22 pm
abuss368 wrote: Tue May 11, 2021 8:20 pm I believe Vanguard has a study showing most folks, if they chose to invest in international, only allocate 20% or less. I think it went down with age or fluctuated. Have you read this or know where it is located? Then we can post well documented study.
I just posted a link to a "well documented study" that is worth reading.
Vince -

Let’s find the Vanguard one so we have more than one study to support our views. I’ll see if I can locate and copy.

Tony
I would have thought that Taylor's post on this thread a year and a half earlier would have ended discussion:

"As much as I admire the B & B two-fund portfolio, I prefer the Three-Fund Portfolio because it includes 20% international exposure for "portfolio insurance."

In December 1989 the Japanese Nikkei 225 Index was about 38,000. Today, 30 years later, the Nikkei 225 is about 22,000. Japanese investors who invested entirely in Japanese stocks, are devastated. This could happen to U.S. investors who invest entirely in U.S. stocks."


---Taylor


Pretty sage advice just 18 months earlier.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Tue May 11, 2021 8:32 pm
abuss368 wrote: Tue May 11, 2021 8:23 pm Let’s find the Vanguard one so we have more than one study to support our views. I’ll see if I can locate and copy.
There are literally volumes of studies, all validated and peer-reviewed, which will tell you the same thing: international diversification is a proven and prudent investment technique.

None of Vanguard's LifeStrategy or Target Retirement funds put less than 40% of their equity allocation into international stocks. Do you REALLY think you're going to find a Vanguard white paper which concludes with "never mind, you don't need diversification"?
Vince -

Not a paper saying not needed. Paper showing average of 20% and older investors being more US based.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

abuss368 wrote: Tue May 11, 2021 8:36 pm Not a paper saying not needed. Paper showing average of 20% and older investors being more US based.
I'm not sure why we would care what the "average" allocation is. Maybe the average international allocation is 20%: so what? That's clearly better than 0%.

And the paper I just linked (did you read it yet?) uses data from 3 million investors to investigate what kinds of investors tend to be more internationally diversified. Conclusion: younger age, higher salary, more education, better financial literacy, and more cosmopolitan zip codes all tend to be associated with higher levels of international diversification.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Tue May 11, 2021 8:46 pm
abuss368 wrote: Tue May 11, 2021 8:36 pm Not a paper saying not needed. Paper showing average of 20% and older investors being more US based.
I'm not sure why we would care what the "average" allocation is. Maybe the average international allocation is 20%: so what? That's clearly better than 0%.

And the paper I just linked (did you read it yet?) uses data from 3 million investors to investigate what kinds of investors tend to be more internationally diversified. Conclusion: younger age, higher salary, more education, better financial literacy, and more cosmopolitan zip codes all tend to be associated with higher levels of international diversification.
Vince -

That is exactly the point I made above. 😂😂 Older investors have less international. Look up thread.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

abuss368 wrote: Tue May 11, 2021 8:48 pm Older investors have less international. Look up thread.
This is the sad reality: the very investors who need the diversification benefits the most are the one least like to get it.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by tomd37 »

vineviz - As an older investor (at age 84) I get all the equity diversification I feel I need with the TSM fund and its overseas diversification through certain companies. Please stop trying to continually push your thoughts on this matter on everyone. :annoyed :annoyed To each his/her own.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

tomd37 wrote: Tue May 11, 2021 9:24 pm vineviz - As an older investor (at age 84) I get all the equity diversification I feel I need with the TSM fund and its overseas diversification through certain companies. Please stop trying to continually push your thoughts on this matter on everyone. :annoyed :annoyed To each his/her own.
This thread is a back and forth advocacy for 2 different positions. Obviously nobody needs to act on what they read in any particular way. But ideas one disagrees with don't need to stay out there unchallenged, however often they may be repeated.
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

tomd37 wrote: Tue May 11, 2021 9:24 pm vineviz - As an older investor (at age 84) I get all the equity diversification I feel I need with the TSM fund and its overseas diversification through certain companies. Please stop trying to continually push your thoughts on this matter on everyone. :annoyed :annoyed To each his/her own.
In your case, equities represent how much of your portfolio?

It probably matters little in your case, but his point for accumulators and retirees is sound.
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Re: Jack Bogle - Two Fund Portfolio

Post by tomd37 »

My equity percentage is 40%, but even in earlier years when it was 60% I still felt the same way as to international diversification. Each of us has their own feelings on the subject and some of us don't want to be "hounded" by others based on their personal feelings. Even Vanguard years ago recommended only 20% for international diversification, but that was their opinion.
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Re: Jack Bogle - Two Fund Portfolio

Post by ruud »

abuss368 wrote: Tue May 11, 2021 8:36 pm Not a paper saying not needed. Paper showing average of 20% and older investors being more US based.
I believe you may be referring to How America Invests 2020, the international allocation by age is on page 24, figure 15, panel C.

Reformatted:

Code: Select all

<25    17%
25-34  21%
35-44  21%
45-54  19%
55-64  18%
65-74  17%
75-84  16%
85+    15%
.
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

abuss368 wrote: Tue May 11, 2021 6:12 pm
Northern Flicker wrote: Tue May 11, 2021 5:41 pm
DB2 wrote: Tue May 11, 2021 2:48 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
I see it more as being generational. Younger investors on this forum seem very open to international where as older investors less so and in some cases dumping or minimizing it.

Institutions (Vanguard, etc.) absolutely moving more into international.
While that is probably true of cryptocurrency speculations and tech sector tilts (older investors often have seen enough speculative bubbles and hot sectors in the present that turn cold in the future not to be lured in), I think older US investors who lived through the US inflation of the 1970's may be more likely to understand the importance of int'l diversification. Certainly, that was an important investing lesson of the 1970's for US investors.
I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.

Tony
I think the quibble many of us have with the thread is promoting the idea of adandoning an asset allocation because one of the assets underperformed. If an investor has always held a US-only equity portfolio, and chooses to continue to do so, that is great. While I think some of them would benefit from int'l equity diversification, if they are not comfortable with it, they should not take it on. Staying the course with a good asset allocation is never a mistake. Likewise, if an investor has diversified their equity allocation with int'l equities, professional investors would recommend staying the course.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

vineviz wrote: Tue May 11, 2021 9:11 pm
abuss368 wrote: Tue May 11, 2021 8:48 pm Older investors have less international. Look up thread.
This is the sad reality: the very investors who need the diversification benefits the most are the one least like to get it.
So young investors can get away with less diversification?
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Tue May 11, 2021 8:17 pm
DB2 wrote: Tue May 11, 2021 7:42 pm I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
The tendency of some demographic groups to exhibit a stronger home bias is pretty well documented.
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.
https://www0.gsb.columbia.edu/mygsb/fac ... sified.pdf
Vince -

Check Vanguard study below! It was found! 5 million households.

That should help expand your thoughts.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Tue May 11, 2021 10:03 pm
vineviz wrote: Tue May 11, 2021 8:17 pm
DB2 wrote: Tue May 11, 2021 7:42 pm I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
The tendency of some demographic groups to exhibit a stronger home bias is pretty well documented.
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.
https://www0.gsb.columbia.edu/mygsb/fac ... sified.pdf
Vince -

Check Vanguard study below! It was found! 5 million households.

That should help expand your thoughts.

Tony
Edward Jones has 8 million clients and $1 Trillion AUM according to Wikipedia. Sorry, what was your point again?
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Da5id wrote: Tue May 11, 2021 10:05 pm
abuss368 wrote: Tue May 11, 2021 10:03 pm
vineviz wrote: Tue May 11, 2021 8:17 pm
DB2 wrote: Tue May 11, 2021 7:42 pm I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
The tendency of some demographic groups to exhibit a stronger home bias is pretty well documented.
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.
https://www0.gsb.columbia.edu/mygsb/fac ... sified.pdf
Vince -

Check Vanguard study below! It was found! 5 million households.

That should help expand your thoughts.

Tony
Edward Jones has 8 million clients and $1 Trillion AUM according to Wikipedia. Sorry, what was your point again?
Sorry you forgot to post the link to that study. Please provide. Vanguard has over $6 trillion and over 25 million clients.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Tue May 11, 2021 10:09 pm
Da5id wrote: Tue May 11, 2021 10:05 pm
abuss368 wrote: Tue May 11, 2021 10:03 pm
vineviz wrote: Tue May 11, 2021 8:17 pm
DB2 wrote: Tue May 11, 2021 7:42 pm I tend to see the older investors adhering to Bogle's advice more on U.S. - holding zero to 20% on international. I've seen a number of younger posters adhering to VT/VTWAX. What we think we are seeing is anecdotal although a poll around age range and international investing would be interesting.
The tendency of some demographic groups to exhibit a stronger home bias is pretty well documented.
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.
https://www0.gsb.columbia.edu/mygsb/fac ... sified.pdf
Vince -

Check Vanguard study below! It was found! 5 million households.

That should help expand your thoughts.

Tony
Edward Jones has 8 million clients and $1 Trillion AUM according to Wikipedia. Sorry, what was your point again?
Sorry you forgot to post the link to that study. Please provide. Vanguard has over $6 trillion and over 25 million clients.

Tony
My point was that "5 million households do X" is not a persuasive argument. Many people do many things wrong. Including IMO the 8 million clients who trust Edward Jones with their assets. Not sure what your point is. Just so I understand your thinking, does "5 million households do X" persuade you of anything you don't already believe in?
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Re: Jack Bogle - Two Fund Portfolio

Post by absolute zero »

tomd37 wrote: Tue May 11, 2021 9:56 pm My equity percentage is 40%, but even in earlier years when it was 60% I still felt the same way as to international diversification. Each of us has their own feelings on the subject and some of us don't want to be "hounded" by others based on their personal feelings. Even Vanguard years ago recommended only 20% for international diversification, but that was their opinion.

Regarding the “hounding” that you refer to - in most cases it’s flip-flop Tony that instigates the back and forth discussion. He recommends this portfolio at least 5-6 times per day, at times unsolicited, and often to new investors. A lot of the posts in this thread warning against US only investing would be, in my opinion, non-existent if OP didn’t recommend the portfolio incessantly, constantly dropping links to it across the forum.
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

anon_investor wrote: Tue May 11, 2021 10:01 pm
vineviz wrote: Tue May 11, 2021 9:11 pm
abuss368 wrote: Tue May 11, 2021 8:48 pm Older investors have less international. Look up thread.
This is the sad reality: the very investors who need the diversification benefits the most are the one least like to get it.
So young investors can get away with less diversification?
Relatively speaking, it’s less impactful for investors who are nearer to the beginning of accumulation.

At that stage of the process, savings rate matters more than asset choice. Not saying it’s unimportant, just that young investors have time to recover from the error of under-diversifying .
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by spdoublebass »

abuss368 wrote: Tue May 11, 2021 10:00 pm
ruud wrote: Tue May 11, 2021 9:57 pm
abuss368 wrote: Tue May 11, 2021 8:36 pm Not a paper saying not needed. Paper showing average of 20% and older investors being more US based.
I believe you may be referring to How America Invests 2020, the international allocation by age is on page 24, figure 15, panel C.

Reformatted:

Code: Select all

<25    17%
25-34  21%
35-44  21%
45-54  19%
55-64  18%
65-74  17%
75-84  16%
85+    15%
There it is! I knew I read it from Vanguard. Vanguard has under 30% from age 45 on up. Vinny did not believe that and should consider reading!

Thank you for posting!
Tony
Why would this matter? So if most people at vanguard were 100% bonds you would follow them and do the same? Everything you post is the opposite of stay the course. All of your posts are public cries for confirmation.

I followed this thread when it first started but then stopped because you seemed more concerned with how many posts it had from the content it contained.

The absolute last thing I’d ever use to decide to include international or not is a study of who does what at vanguard. I’d put much more weight into Vanguards White Papers.
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

tomd37 wrote: Tue May 11, 2021 9:56 pm My equity percentage is 40%, but even in earlier years when it was 60% I still felt the same way as to international diversification. Each of us has their own feelings on the subject and some of us don't want to be "hounded" by others based on their personal feelings. Even Vanguard years ago recommended only 20% for international diversification, but that was their opinion.
You got lucky with a very fortunate period to invest as someone with US only investments. That may not be true for someone else investing as an early accumulator or retiree. Do not confuse outcome with strategy.

I don’t believe anyone is hounding somebody to change course as much as it is to have an honest debate about a critical part of somebody’s investment decision making process.

There’s a lot of disinformation about a US only portfolio on the basis of performance chasing and it could be quite detrimental to certain investors that have reached certain phases of their lives.
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Re: Jack Bogle - Two Fund Portfolio

Post by BabaWawa »

abuss368 wrote: Tue May 11, 2021 8:18 pm
RJC wrote: Tue May 11, 2021 8:15 pm
anon_investor wrote: Tue May 11, 2021 6:51 pm
Da5id wrote: Tue May 11, 2021 6:22 pm
abuss368 wrote: Tue May 11, 2021 6:12 pm I am not so sure older investors want international diversification as much as younger investors. Older investors may be more inclined to invest in the US only. Back then it was a lot more costly not to mention limited opportunities. I have family who worked for Merrill Lynch. Totally different times.
So because International funds used to be expensive hard to find/expensive, older investors don't in the present tense desire international diversification? I'm a bit confused by the logic. Or is it because (some) older investors continue to think of them as hard to find or expensive? Which also seems unlikely?
More like they didn't have them for those reasons in the past and feel like they lived without them for all those years and did fine, so why get them now? I kind of feel like that at least.
This is where my head is at as well. Will a 20% allocation to international even make a difference at this point after all these years of staying the course?
Exactly. No difference and the horrible performance has many people questioning the need and making changes.

If you are 40% stock and 60% bond and allocate 20% of stocks to international, that is only 8%.

MEANINGLESS!

Invest in what we know (US) and works. We work here. We live here. We spend here. We follow laws here. We pay taxes here. We will retire here. Invest here!

Tony
In other words, put all your eggs in one basket. What could possibly go wrong there? Tony, your statement makes me want to increase my international exposure even more. I still value diversification. With 6 tech stocks accounting for almost 20% of the cap weighted total US market, I'm not willing to risk my future portfolio on your hope and dream for continued outperformance.
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