I'll never regret not having international funds in my portfolio

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Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

TN_Boy wrote: Wed Jun 16, 2021 4:48 pm Point 2) is important, just like 4) is important. US population much larger than Japan, US much greater natural resources, US much stronger immigration etc.

The US has clearly been "special." Whether this "specialness" will continue is a matter of speculation and we care about forward returns, not backward ones.

While I disagree with a US only portfolio, even for a US investor, I don't think it is completely foolish.
When I see things like the above -- like the US having greater natural resources, stronger immigration, special in whatever way -- I do wonder to what extent they would be priced in. As they are things that are widely known, it isn't unreasonable to expect valuations to reflect them IMO. Of course you can say that the markets aren't efficient etc, but how does one know that for sure going forward?

I also don't think US only is completely foolish, I just think it isn't the best choice. Given that my stocks are 60% US/40% int'l I do better when the US outperforms.
visualguy
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Re: I'll never regret not having international funds in my portfolio

Post by visualguy »

Nathan Drake wrote: Wed Jun 16, 2021 4:43 pm
visualguy wrote: Wed Jun 16, 2021 4:09 pm
UpperNwGuy wrote: Wed Jun 16, 2021 3:48 pm I just topped off my international to bring it back up to 20% of equities. It keeps dropping below the 20% target as it loses the race with US equities. I keep waiting for that coming "decade of international outperformance" that the theoreticians here on bogleheads keep promising us.
Even if a significant period of ex-US outperformance comes, there's no realistic hope of it coming anywhere near to catching up with US in long-term returns since it's so far behind. There would need to be some huge crash in the US, while ex-US flourishes. I wouldn't hold my breath...
This is fallacious reasoning. ExUS could simply perform better with compounded higher returns for a long period of time. A US crash isn’t required.

And of course it’s highly dependent on your personal investment horizon. An investor that had been 100% US only since the 90s enjoyed 2 out of 3 those decades with out performance. Starting and ending dates.

But if that investor looks at their portfolio with glee and says “Nice! I have finally reached a 4% SWR! I can retire on 60/40 US only portfolio” and both bonds and US stocks proceed to return negative real returns for the next 10-15 years collectively (due to overvaluation of both assets), they will be in an absolutely disastrous retirement scenario. Meanwhile, if during the same timeframe exUS has significant real returns, this investor has put themselves in a an unfortunate position due to lack of adequate diversification and a failure to appreciate risk.

But of course the reasonable among us aren’t 100% anything, so our bets are hedged either way.
The long-term performance difference between US and ex-US has been tremendous. Any realistic level of out-performance by ex-US at this point can't come anywhere near closing that gap.

If ex-US outperforms for a while going forward from now, then, sure, it would be better to be invested in it now, but you can't time that, and if you had stuck to the strategy of holding it throughout your entire investment life (assuming you're well into it), your portfolio would have been much smaller now. With that scenario, you would have better returns going forward for a while because of this presumed upcoming ex-US out-performance, but with a much smaller nest egg.

Many very reasonable people are 100% invested in US indexing, tech, real estate, etc. Arguing with success or calling it not reasonable makes zero sense to me. We're all betting on some things and not invested in all types of assets. The test is ultimately in how successful the portfolio has been, not in meeting some fabricated purity criteria about diversification across countries or whatever.
visualguy
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Re: I'll never regret not having international funds in my portfolio

Post by visualguy »

Da5id wrote: Wed Jun 16, 2021 5:04 pm
TN_Boy wrote: Wed Jun 16, 2021 4:48 pm Point 2) is important, just like 4) is important. US population much larger than Japan, US much greater natural resources, US much stronger immigration etc.

The US has clearly been "special." Whether this "specialness" will continue is a matter of speculation and we care about forward returns, not backward ones.

While I disagree with a US only portfolio, even for a US investor, I don't think it is completely foolish.
When I see things like the above -- like the US having greater natural resources, stronger immigration, special in whatever way -- I do wonder to what extent they would be priced in. As they are things that are widely known, it isn't unreasonable to expect valuations to reflect them IMO. Of course you can say that the markets aren't efficient etc, but how does one know that for sure going forward?

I also don't think US only is completely foolish, I just think it isn't the best choice. Given that my stocks are 60% US/40% int'l I do better when the US outperforms.
Well, this "priced in" argument goes only so far. Future public companies can't really be priced in. Google wasn't priced into IBM before Google existed, Tesla wasn't priced into GM, nVidia wasn't priced into Intel, etc.
Nathan Drake
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

visualguy wrote: Wed Jun 16, 2021 5:15 pm
Nathan Drake wrote: Wed Jun 16, 2021 4:43 pm
visualguy wrote: Wed Jun 16, 2021 4:09 pm
UpperNwGuy wrote: Wed Jun 16, 2021 3:48 pm I just topped off my international to bring it back up to 20% of equities. It keeps dropping below the 20% target as it loses the race with US equities. I keep waiting for that coming "decade of international outperformance" that the theoreticians here on bogleheads keep promising us.
Even if a significant period of ex-US outperformance comes, there's no realistic hope of it coming anywhere near to catching up with US in long-term returns since it's so far behind. There would need to be some huge crash in the US, while ex-US flourishes. I wouldn't hold my breath...
This is fallacious reasoning. ExUS could simply perform better with compounded higher returns for a long period of time. A US crash isn’t required.

And of course it’s highly dependent on your personal investment horizon. An investor that had been 100% US only since the 90s enjoyed 2 out of 3 those decades with out performance. Starting and ending dates.

But if that investor looks at their portfolio with glee and says “Nice! I have finally reached a 4% SWR! I can retire on 60/40 US only portfolio” and both bonds and US stocks proceed to return negative real returns for the next 10-15 years collectively (due to overvaluation of both assets), they will be in an absolutely disastrous retirement scenario. Meanwhile, if during the same timeframe exUS has significant real returns, this investor has put themselves in a an unfortunate position due to lack of adequate diversification and a failure to appreciate risk.

But of course the reasonable among us aren’t 100% anything, so our bets are hedged either way.
The long-term performance difference between US and ex-US has been tremendous. Any realistic level of out-performance by ex-US at this point can't come anywhere near closing that gap.

If ex-US outperforms for a while going forward from now, then, sure, it would be better to be invested in it now, but you can't time that, and if you had stuck to the strategy of holding it throughout your entire investment life (assuming you're well into it), your portfolio would have been much smaller now. With that scenario, you would have better returns going forward for a while because of this presumed upcoming ex-US out-performance, but with a much smaller nest egg.

Many very reasonable people are 100% invested in US indexing, tech, real estate, etc. Arguing with success or calling it not reasonable makes zero sense to me. We're all betting on some things and not invested in all types of assets. The test is ultimately in how successful the portfolio has been, not in meeting some fabricated purity criteria about diversification across countries or whatever.
Investing isn’t about “closing gaps”, it’s about risk management, retirement planning, and ensuring bad tail outcomes are mitigated.

When will VTSAX close the gap with AAPL? Likely not in our lifetimes. Regardless, I can more reasonably retire on VTSAX than I can AAPL, and similarly I can more reasonably retire on a combination of VTSAX and VTIAX combined than one at the exclusion of the other.

If you don’t believe in holding assets that haven’t historically performed as well over a certain period, why are you on this forum? Join a stock picking forum instead, where risk management isn’t a consideration

Your acknowledgment that you can’t “time” when something will outperform is a concession that more concentrated portfolios such as US only are not as wise as a more diversified one
Last edited by Nathan Drake on Wed Jun 16, 2021 5:30 pm, edited 1 time in total.
All Seasons
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Re: I'll never regret not having international funds in my portfolio

Post by All Seasons »

You'll probably regret it when we see a protracted period of low returns in U.S. markets.
Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

visualguy wrote: Wed Jun 16, 2021 5:21 pm
Da5id wrote: Wed Jun 16, 2021 5:04 pm
TN_Boy wrote: Wed Jun 16, 2021 4:48 pm Point 2) is important, just like 4) is important. US population much larger than Japan, US much greater natural resources, US much stronger immigration etc.

The US has clearly been "special." Whether this "specialness" will continue is a matter of speculation and we care about forward returns, not backward ones.

While I disagree with a US only portfolio, even for a US investor, I don't think it is completely foolish.
When I see things like the above -- like the US having greater natural resources, stronger immigration, special in whatever way -- I do wonder to what extent they would be priced in. As they are things that are widely known, it isn't unreasonable to expect valuations to reflect them IMO. Of course you can say that the markets aren't efficient etc, but how does one know that for sure going forward?

I also don't think US only is completely foolish, I just think it isn't the best choice. Given that my stocks are 60% US/40% int'l I do better when the US outperforms.
Well, this "priced in" argument goes only so far. Future public companies can't really be priced in. Google wasn't priced into IBM before Google existed, Tesla wasn't priced into GM, nVidia wasn't priced into Intel, etc.
If US companies have an innovation advantage as a group, I'd also assume that is priced in at the IPO. Prior to the IPO they aren't of interest to me as I don't invest in non-public companies that aren't in an index. Who knows? Maybe this is wrong, maybe companies don't IPO at valuations that reflect the US advantages (to the extent that they are known prospectively). I just generally am happy to assume reasonable efficiency in markets and diversify to include int'l stocks. I don't make strong predictions about which will outperform (I'm slightly overweight in US stocks). US past outperformance is great. Int'l future outperformance, whenever it appears, also great. I'm doing fine either way.
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David Jay
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Re: I'll never regret not having international funds in my portfolio

Post by David Jay »

z3r0c00l wrote: Wed Jun 16, 2021 4:23 pm
David Jay wrote: Wed Jun 16, 2021 8:39 am
z3r0c00l wrote: Tue Jun 15, 2021 8:49 amis helmed by a CEO with a 8-byte attention span.
Any yet one of his firms is the first company to operate reusable rockets and carry humans into space. Imagine what he could do with an 8-word attention span...
Reusable manned spacecraft like the space shuttle circa 1981?
Only nation-states have achieved that. Not private companies.
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FIREchief
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Re: I'll never regret not having international funds in my portfolio

Post by FIREchief »

z3r0c00l wrote: Mon Jun 14, 2021 11:10 am
tvubpwcisla wrote: Mon Jun 14, 2021 10:55 am I have decided to exclude international funds from my portfolio. I have watched a lot of videos about Mr. Bogle and he also excluded them and saw no reason to own any. What are your thoughts on either including or excluding international from your portfolio?
This conversation has been covered ad nausea a few hundred times already
Yep. And that's just this week..... :P
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
mariezzz
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Re: I'll never regret not having international funds in my portfolio

Post by mariezzz »

Nathan Drake wrote: Tue Jun 15, 2021 9:06 pm
mariezzz wrote: Tue Jun 15, 2021 8:43 pm
nisiprius wrote: Mon Jun 14, 2021 12:48 pm I continue to hold one of the most unorthodox opinions of all. I don't think it matters much.

Up to 2002 I didn't have any international stocks because I just hadn't though about it much. When I started reading more, I began to become aware that most mainstream advice said people should have some. 20% of stocks was a typical suggestion of the day. The reason I finally made the change was that I became aware that the dollar was weakening.

So I just did a rough reality check.

If I had stuck with 100% US, my portfolio would have about 2% more than it does today. Over twenty years. Over this particular twenty-year period, the luck and the breaks mean my decision to hold international stocks has averaged about a -0.1%/year drag.

That really doesn't bother me. It could go the other way in the next few years, or maybe not. It just hasn't mattered much. It was a reasonable decision, and it's turned out perfectly OK.
I agree with this completely. After researching and weighing pros and cons, I decided about 8-9 years ago I didn't need international - that it wouldn't make much of a difference either way. I haven't felt any need to change my decision since then. Many of the companies in VTSAX do business internationally. That's good enough for me.
Will it be good enough for you if the US sees a prolonged 15 year + dead market or worse (like Japan?)

I always find it funny how some say it won’t matter much when we have seen repeatedly throughout history where it can matter significantly for your personalized horizon
Yes, what I've done up to this point WILL be good enough for me "if the US sees a prolonged 15 year + dead market or worse".
This decision was right for me. I don't regret the decision at all - and won't in the future. I made the best decision for me given the information I had at the time, so there's nothing for me to regret. There were all sorts of benefits for me to not worry about the international bucket - simpler portfolio, slept better at night, less research to do. [I also had a higher exposure to equity (VTSAX or equivalent) than most people here for most of this time - in the last 9 months or so I reduced it a bit, but still probably on the high end for many here. It has worked for me, and has really helped my portfolio grow.] If at some point, I feel a change in my portfolio needs to be made, I'll do the research, consider the options, and [try to] make the decision in an unemotional way.

I don't think having an 'international' component to one's portfolio (at least for someone in the US) is necessary. People need to inform themselves, weigh the options, and make the decision that's best for them. Over time, one might re-think that decision as their circumstances change, but that's not the same as regret.

I think the same question can be asked of people who have an international component .... has it be 'good enough for you'?

And it's worth mentioning: there are so many flavors of 'international' it doesn't make sense to talk about 'international'. One really must specify exactly what funds are in one's portfolio - or at least segments (emerging markets, Europe, etc.)
mariezzz
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Re: I'll never regret not having international funds in my portfolio

Post by mariezzz »

tvubpwcisla wrote: Wed Jun 16, 2021 5:51 am Great discussion. It sounds like whether you include international in your investment strategy or you do not, you will most likely end up just fine.
At the very least, other things matter a whole lot more.
JBTX
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Re: I'll never regret not having international funds in my portfolio

Post by JBTX »

Beensabu wrote: Wed Jun 16, 2021 4:23 pm
JBTX wrote: Wed Jun 16, 2021 1:45 am
Beensabu wrote: Tue Jun 15, 2021 11:56 pm
JBTX wrote: Tue Jun 15, 2021 11:29 pm
Beensabu wrote: Tue Jun 15, 2021 11:28 pm

LOL. Before I clicked on the link, I was like "Is it Monty Python? Please be Monty Python..."
No you didn't.
Oh yes I did, and you can't prove otherwise.
Yes I can.
No you can't.
Yes I can.

But I don't want to.
chipperd
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Re: I'll never regret not having international funds in my portfolio

Post by chipperd »

So the OP doesn't regret missing out on 43% returns in the past year? Guess the OP isn't into investing to make money.
https://investor.vanguard.com/mutual-fu ... ance/vtiax
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Nathan Drake
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

mariezzz wrote: Thu Jun 17, 2021 2:19 pm
Nathan Drake wrote: Tue Jun 15, 2021 9:06 pm
mariezzz wrote: Tue Jun 15, 2021 8:43 pm
nisiprius wrote: Mon Jun 14, 2021 12:48 pm I continue to hold one of the most unorthodox opinions of all. I don't think it matters much.

Up to 2002 I didn't have any international stocks because I just hadn't though about it much. When I started reading more, I began to become aware that most mainstream advice said people should have some. 20% of stocks was a typical suggestion of the day. The reason I finally made the change was that I became aware that the dollar was weakening.

So I just did a rough reality check.

If I had stuck with 100% US, my portfolio would have about 2% more than it does today. Over twenty years. Over this particular twenty-year period, the luck and the breaks mean my decision to hold international stocks has averaged about a -0.1%/year drag.

That really doesn't bother me. It could go the other way in the next few years, or maybe not. It just hasn't mattered much. It was a reasonable decision, and it's turned out perfectly OK.
I agree with this completely. After researching and weighing pros and cons, I decided about 8-9 years ago I didn't need international - that it wouldn't make much of a difference either way. I haven't felt any need to change my decision since then. Many of the companies in VTSAX do business internationally. That's good enough for me.
Will it be good enough for you if the US sees a prolonged 15 year + dead market or worse (like Japan?)

I always find it funny how some say it won’t matter much when we have seen repeatedly throughout history where it can matter significantly for your personalized horizon
Yes, what I've done up to this point WILL be good enough for me "if the US sees a prolonged 15 year + dead market or worse".
This decision was right for me. I don't regret the decision at all - and won't in the future. I made the best decision for me given the information I had at the time, so there's nothing for me to regret. There were all sorts of benefits for me to not worry about the international bucket - simpler portfolio, slept better at night, less research to do. [I also had a higher exposure to equity (VTSAX or equivalent) than most people here for most of this time - in the last 9 months or so I reduced it a bit, but still probably on the high end for many here. It has worked for me, and has really helped my portfolio grow.] If at some point, I feel a change in my portfolio needs to be made, I'll do the research, consider the options, and [try to] make the decision in an unemotional way.

I don't think having an 'international' component to one's portfolio (at least for someone in the US) is necessary. People need to inform themselves, weigh the options, and make the decision that's best for them. Over time, one might re-think that decision as their circumstances change, but that's not the same as regret.

I think the same question can be asked of people who have an international component .... has it be 'good enough for you'?

And it's worth mentioning: there are so many flavors of 'international' it doesn't make sense to talk about 'international'. One really must specify exactly what funds are in one's portfolio - or at least segments (emerging markets, Europe, etc.)
Sounds like there’s a lot of unquantifiable reasons why you choose a strategy that has the possibility of you not meeting your financial goals on scenarios that you are not taking into account.

There’s truly no good reason to be 100% US only. If you love US that much, then even 20% of international is enough to provide a certain level of insurance in case you are gravely wrong.

If that’s simply too much international for you and you will be kept up too many nights dreading that international has dragged down your portfolio in an insignificant way, then I suggest saving enough to have a 1-2% SWR to mitigate the risks you don’t seem to take seriously
mariezzz
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Re: I'll never regret not having international funds in my portfolio

Post by mariezzz »

Nathan Drake wrote: Thu Jun 17, 2021 2:58 pm Sounds like there’s a lot of unquantifiable reasons why you choose a strategy that has the possibility of you not meeting your financial goals on scenarios that you are not taking into account.

There’s truly no good reason to be 100% US only. If you love US that much, then even 20% of international is enough to provide a certain level of insurance in case you are gravely wrong.

If that’s simply too much international for you and you will be kept up too many nights dreading that international has dragged down your portfolio in an insignificant way, then I suggest saving enough to have a 1-2% SWR to mitigate the risks you don’t seem to take seriously
As Taylor Larimore has said on many occasions: There's more than one road to Dublin.
You've made choices that fit your needs, and that's your right. There isn't a one size, fits all approach that fits everyone. I could argue with others that they need to be heavy in equities (90% or more), and while I don't think that's a bad idea, especially for younger people, I realize it doesn't fit everyone's risk tolerance or other considerations they might have. I respect their choices, even if they're not mine. It worked very well for me - even when the markets dropped last March, I wasn't worried because I had gained so much by being heavy in equities, plus I knew the market would recover (and for this reason, I shifted cash into equities - not a huge percent, but some, with a nice outcome).

As nisipirius said, the difference in outcome between having an allocation toward 'international' vs. not, is small.

As I said, one needs to specify what flavors of 'international' one is talking about, for the discussion to have any real meaning - these threads about 'international' almost always seem to miss this important detail.
Nathan Drake
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

mariezzz wrote: Thu Jun 17, 2021 4:18 pm
Nathan Drake wrote: Thu Jun 17, 2021 2:58 pm Sounds like there’s a lot of unquantifiable reasons why you choose a strategy that has the possibility of you not meeting your financial goals on scenarios that you are not taking into account.

There’s truly no good reason to be 100% US only. If you love US that much, then even 20% of international is enough to provide a certain level of insurance in case you are gravely wrong.

If that’s simply too much international for you and you will be kept up too many nights dreading that international has dragged down your portfolio in an insignificant way, then I suggest saving enough to have a 1-2% SWR to mitigate the risks you don’t seem to take seriously
As Taylor Larimore has said on many occasions: There's more than one road to Dublin.
You've made choices that fit your needs, and that's your right. There isn't a one size, fits all approach that fits everyone. I could argue with others that they need to be heavy in equities (90% or more), and while I don't think that's a bad idea, especially for younger people, I realize it doesn't fit everyone's risk tolerance or other considerations they might have. I respect their choices, even if they're not mine. It worked very well for me - even when the markets dropped last March, I wasn't worried because I had gained so much by being heavy in equities, plus I knew the market would recover (and for this reason, I shifted cash into equities - not a huge percent, but some, with a nice outcome).

As nisipirius said, the difference in outcome between having an allocation toward 'international' vs. not, is small.

As I said, one needs to specify what flavors of 'international' one is talking about, for the discussion to have any real meaning - these threads about 'international' almost always seem to miss this important detail.
The “flavor” of international is as simple as VTIAX

Sure, many roads to Dublin, some are paved with land minds that may see a 4% SWR fail
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Re: I'll never regret not having international funds in my portfolio

Post by GaryA505 »

These US vs ex-US threads always end the same. Nobody knows which is better - 0%, 20%, 40%, or world market weighting (VT/VTWAX). Nobody can provide any hard evidence supporting their case for any allocation. All we know is what happened in the past. Beyond that, it's all just opinions and speculation.
"Get most of it right and don't make any big mistakes."
visualguy
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Re: I'll never regret not having international funds in my portfolio

Post by visualguy »

mariezzz wrote: Thu Jun 17, 2021 4:18 pm As I said, one needs to specify what flavors of 'international' one is talking about, for the discussion to have any real meaning - these threads about 'international' almost always seem to miss this important detail.
You are correct. Many (most?) here slice and dice international in all kinds of ways, and when they say "international" they don't really mean the ex-US index.

I don't personally invest in non-US stock markets, and I don't like the ex-US index at all as an investment, but there are some more selective strategies that make sense to me. I don't bother with those mostly because of the unnecessary complication and the very limited difference it would make at the percentage that I would allocate to them.
Nathan Drake
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

GaryA505 wrote: Thu Jun 17, 2021 5:11 pm These US vs ex-US threads always end the same. Nobody knows which is better - 0%, 20%, 40%, or world market weighting (VT/VTWAX). Nobody can provide any hard evidence supporting their case for any allocation. All we know is what happened in the past. Beyond that, it's all just opinions and speculation.
The problem with your statement is that the two camps are as follows:

- 100% US
- Some combination of US and exUS

The latter is reasonable, the former goes against the general financial planning advice.

This isn’t a 100% US vs 100% exUS discussion
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Re: I'll never regret not having international funds in my portfolio

Post by jginseattle »

visualguy wrote: Wed Jun 16, 2021 5:15 pm
Nathan Drake wrote: Wed Jun 16, 2021 4:43 pm
visualguy wrote: Wed Jun 16, 2021 4:09 pm
UpperNwGuy wrote: Wed Jun 16, 2021 3:48 pm I just topped off my international to bring it back up to 20% of equities. It keeps dropping below the 20% target as it loses the race with US equities. I keep waiting for that coming "decade of international outperformance" that the theoreticians here on bogleheads keep promising us.
Even if a significant period of ex-US outperformance comes, there's no realistic hope of it coming anywhere near to catching up with US in long-term returns since it's so far behind. There would need to be some huge crash in the US, while ex-US flourishes. I wouldn't hold my breath...
This is fallacious reasoning. ExUS could simply perform better with compounded higher returns for a long period of time. A US crash isn’t required.

And of course it’s highly dependent on your personal investment horizon. An investor that had been 100% US only since the 90s enjoyed 2 out of 3 those decades with out performance. Starting and ending dates.

But if that investor looks at their portfolio with glee and says “Nice! I have finally reached a 4% SWR! I can retire on 60/40 US only portfolio” and both bonds and US stocks proceed to return negative real returns for the next 10-15 years collectively (due to overvaluation of both assets), they will be in an absolutely disastrous retirement scenario. Meanwhile, if during the same timeframe exUS has significant real returns, this investor has put themselves in a an unfortunate position due to lack of adequate diversification and a failure to appreciate risk.

But of course the reasonable among us aren’t 100% anything, so our bets are hedged either way.
The long-term performance difference between US and ex-US has been tremendous. Any realistic level of out-performance by ex-US at this point can't come anywhere near closing that gap.

If ex-US outperforms for a while going forward from now, then, sure, it would be better to be invested in it now, but you can't time that, and if you had stuck to the strategy of holding it throughout your entire investment life (assuming you're well into it), your portfolio would have been much smaller now. With that scenario, you would have better returns going forward for a while because of this presumed upcoming ex-US out-performance, but with a much smaller nest egg.

Many very reasonable people are 100% invested in US indexing, tech, real estate, etc. Arguing with success or calling it not reasonable makes zero sense to me. We're all betting on some things and not invested in all types of assets. The test is ultimately in how successful the portfolio has been, not in meeting some fabricated purity criteria about diversification across countries or whatever.
The "Buy What Has Gone Up The Most" strategy.
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Re: I'll never regret not having international funds in my portfolio

Post by GaryA505 »

Nathan Drake wrote: Thu Jun 17, 2021 5:22 pm
GaryA505 wrote: Thu Jun 17, 2021 5:11 pm These US vs ex-US threads always end the same. Nobody knows which is better - 0%, 20%, 40%, or world market weighting (VT/VTWAX). Nobody can provide any hard evidence supporting their case for any allocation. All we know is what happened in the past. Beyond that, it's all just opinions and speculation.
The problem with your statement is that the two camps are as follows:

- 100% US
- Some combination of US and exUS

The latter is reasonable, the former goes against the general financial planning advice.

This isn’t a 100% US vs 100% exUS discussion
I would agree that some combination of US and exUS is "reasonable", but is not 100% US reasonable as well?

Isn't this so-called "general financial planning advice" is just a guess based on what has happened in the past?
If it was more than that guess, it could be proven and then wouldn't everyone be would be doing it.
"Get most of it right and don't make any big mistakes."
chipperd
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Re: I'll never regret not having international funds in my portfolio

Post by chipperd »

How would one even invest 100% domestic? Every major company is international to some extent. Silly thread.
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Nathan Drake
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

GaryA505 wrote: Thu Jun 17, 2021 6:33 pm
Nathan Drake wrote: Thu Jun 17, 2021 5:22 pm
GaryA505 wrote: Thu Jun 17, 2021 5:11 pm These US vs ex-US threads always end the same. Nobody knows which is better - 0%, 20%, 40%, or world market weighting (VT/VTWAX). Nobody can provide any hard evidence supporting their case for any allocation. All we know is what happened in the past. Beyond that, it's all just opinions and speculation.
The problem with your statement is that the two camps are as follows:

- 100% US
- Some combination of US and exUS

The latter is reasonable, the former goes against the general financial planning advice.

This isn’t a 100% US vs 100% exUS discussion
I would agree that some combination of US and exUS is "reasonable", but is not 100% US reasonable as well?

Isn't this so-called "general financial planning advice" is just a guess based on what has happened in the past?
If it was more than that guess, it could be proven and then wouldn't everyone be would be doing it.
I'm of the opinion that 100% US is NOT reasonable. If you argue it is, then you should also argue that 100% exUS is reasonable. But nobody invests 100% exUS DESPITE being far more diversified than 100% US. And we have had periods in history where a dominant country or region has fallen out of favor and their trailing returns don't command the same level they once had moving forward, even as some of their businesses continue to grow profits at a reasonable pace. The poor investment returns are the result of changing valuations and sentiment.

A 100% US only portfolio has done well in retrospect. However, it has done well when either Bonds, Equities, or Both have featured low valuations. The starting point NOW is US equities and Bonds being at some of the highest levels of valuation they've ever been. And in addition to that, the US dollar is also quite strong. What will happen to this investor if they chose to retire on the 4% SWR and valuations collapse for both bonds and equities? They will have a disastrous sequence of returns risk.

ExUS, EM, SCV are all considerably less pricey and feature higher expected returns as a result. The combination of any of these could help keep the 4% SWR in tact in the face of collapsing valuations and pricing for US equities/bonds.
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Re: I'll never regret not having international funds in my portfolio

Post by anon_investor »

chipperd wrote: Thu Jun 17, 2021 6:38 pm How would one even invest 100% domestic? Every major company is international to some extent. Silly thread.
Buy minor ones? :twisted:
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Re: I'll never regret not having international funds in my portfolio

Post by ckangas »

GaryA505 wrote: Thu Jun 17, 2021 6:33 pm
Nathan Drake wrote: Thu Jun 17, 2021 5:22 pm
GaryA505 wrote: Thu Jun 17, 2021 5:11 pm These US vs ex-US threads always end the same. Nobody knows which is better - 0%, 20%, 40%, or world market weighting (VT/VTWAX). Nobody can provide any hard evidence supporting their case for any allocation. All we know is what happened in the past. Beyond that, it's all just opinions and speculation.
The problem with your statement is that the two camps are as follows:

- 100% US
- Some combination of US and exUS

The latter is reasonable, the former goes against the general financial planning advice.

This isn’t a 100% US vs 100% exUS discussion
I would agree that some combination of US and exUS is "reasonable", but is not 100% US reasonable as well?

Isn't this so-called "general financial planning advice" is just a guess based on what has happened in the past?
If it was more than that guess, it could be proven and then wouldn't everyone be would be doing it.
You can't prove that investing in equities and bonds will outperform pure cash over a lifetime. Or compared to going to Vegas for that matter. Gambling or pure cash could prove to be the better option, even over a long lifetime.

The best you can do is look at historical data and put together a compelling model of why those results should hold in the future.
Academics will never be able to prove an international allocation is superior to eschewing it. But the same can be said about nearly anything in investing. As the saying goes, it isn't physics.
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Re: I'll never regret not having international funds in my portfolio

Post by Johnathon Livingston »

“What this PE ratio does tell you is that stocks still have lots of room to fall--30%, just to get back to normal, much more than 30% if they "overshoot." And it also tells you that long-term returns are still likely to be sub-par.”

-Business Insider on US stocks, August 4,2011

https://www.businessinsider.com/the-cra ... ued-2011-8


Average annual return on US stocks since 2011: 14.35%
Average annual return on ex-US since 2011: 5.83%

Don’t bet against the US.
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Re: I'll never regret not having international funds in my portfolio

Post by Beensabu »

JBTX wrote: Thu Jun 17, 2021 2:46 pm
Beensabu wrote: Wed Jun 16, 2021 4:23 pm
JBTX wrote: Wed Jun 16, 2021 1:45 am
Beensabu wrote: Tue Jun 15, 2021 11:56 pm
JBTX wrote: Tue Jun 15, 2021 11:29 pm

No you didn't.
Oh yes I did, and you can't prove otherwise.
Yes I can.
No you can't.
Yes I can.

But I don't want to.
Yes you do.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

Johnathon Livingston wrote: Thu Jun 17, 2021 7:00 pm “What this PE ratio does tell you is that stocks still have lots of room to fall--30%, just to get back to normal, much more than 30% if they "overshoot." And it also tells you that long-term returns are still likely to be sub-par.”

-Business Insider on US stocks, August 4,2011

https://www.businessinsider.com/the-cra ... ued-2011-8


Average annual return on US stocks since 2011: 14.35%
Average annual return on ex-US since 2011: 5.83%

Don’t bet against the US.
And I can play the same game but with a different period of time.

Image

Not being 100% US doesn't mean you're betting against the US. Being 0% exUS means you are betting against exUS.
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Re: I'll never regret not having international funds in my portfolio

Post by mindboggling »

As the musician/songwriter Paul Thorn sang:

"Whatever you believe, you might be wrong..."

Good luck, everyone!
In broken mathematics, We estimate our prize, --Emily Dickinson
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Re: I'll never regret not having international funds in my portfolio

Post by Johnathon Livingston »

Nathan Drake wrote: Thu Jun 17, 2021 7:08 pm
Johnathon Livingston wrote: Thu Jun 17, 2021 7:00 pm “What this PE ratio does tell you is that stocks still have lots of room to fall--30%, just to get back to normal, much more than 30% if they "overshoot." And it also tells you that long-term returns are still likely to be sub-par.”

-Business Insider on US stocks, August 4,2011

https://www.businessinsider.com/the-cra ... ued-2011-8


Average annual return on US stocks since 2011: 14.35%
Average annual return on ex-US since 2011: 5.83%

Don’t bet against the US.
And I can play the same game but with a different period of time.

Image

Not being 100% US doesn't mean you're betting against the US. Being 0% exUS means you are betting against exUS.
My point is that people have been saying that US stocks are overvalued and won’t continue to perform for over a decade. But now that you bring up one of the worst decades for US stocks to make the case for ex-US note that the total US stock market average annual return for 2000 to end of 2009 was -.27. Ex-US was only 2.29%. And then we all know what happened from 2010 forward. Not so good for ex-US. And please don’t point to ex-US performance before 2000 back when it was not very correlated with the US.

I hold ex-US but I recognize that it’s been a lazy dog for over a decade and deserves reconsideration. The fact is ex-US is seen as risky and gets dumped hard and sold off at the first sign of trouble. It falls harder and stays down longer generally speaking because people don’t have faith in it when times get tough. You have to ask yourself, why oh why won’t ex-US rise when the PE is so much better than US??? Because it’s properly priced to account for all the problems with it. The EU, the Chinese Communist Party, UK, Brazil, India, Japan— need I say more than that to illustrate the problem? I believe in US exceptionalism. It’s the greatest nation on Earth, BY FAR! But it doesn’t even have to be exceptional to not want to buy into the political problems that those nations present. But go ahead and tilt your portfolio to ex-US. Maybe it will shine for a little while. It does from time to time. The OP said he’ll never regret being all US and to that I say I agree! Over time the OP will do great.
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Re: I'll never regret not having international funds in my portfolio

Post by RJC »

Same talking points on both sides. On paper, having about up to 20-30% ex-US sounds like a prudent idea but at the end of the day, I don't think it will matter much. If you do have ex-US, it might not be fun seeing a constant drag on your portfolio either.
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

RJC wrote: Thu Jun 17, 2021 7:35 pm Same talking points on both sides over and over again. On paper, having about up to 20-30% ex-US sounds like a prudent idea but at the end of the day, I don't think it will matter much. If you do have ex-US, it might not be fun seeing a constant drag on your portfolio either.
A 20-30% allocation could matter a LOT.

If you have 100% US, are you upset about all the non-tech stocks dragging you down too? Good thing history shows us that these things aren't a constant drag.
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

Johnathon Livingston wrote: Thu Jun 17, 2021 7:32 pm
Nathan Drake wrote: Thu Jun 17, 2021 7:08 pm
Johnathon Livingston wrote: Thu Jun 17, 2021 7:00 pm “What this PE ratio does tell you is that stocks still have lots of room to fall--30%, just to get back to normal, much more than 30% if they "overshoot." And it also tells you that long-term returns are still likely to be sub-par.”

-Business Insider on US stocks, August 4,2011

https://www.businessinsider.com/the-cra ... ued-2011-8


Average annual return on US stocks since 2011: 14.35%
Average annual return on ex-US since 2011: 5.83%

Don’t bet against the US.
And I can play the same game but with a different period of time.

Image

Not being 100% US doesn't mean you're betting against the US. Being 0% exUS means you are betting against exUS.
My point is that people have been saying that US stocks are overvalued and won’t continue to perform for over a decade. But now that you bring up one of the worst decades for US stocks to make the case for ex-US note that the total US stock market average annual return for 2000 to end of 2009 was -.27. Ex-US was only 2.29%. And then we all know what happened from 2010 forward. Not so good for ex-US. And please don’t point to ex-US performance before 2000 back when it was not very correlated with the US.

I hold ex-US but I recognize that it’s been a lazy dog for over a decade and deserves reconsideration. The fact is ex-US is seen as risky and gets dumped hard and sold off at the first sign of trouble. It falls harder and stays down longer generally speaking because people don’t have faith in it when times get tough. You have to ask yourself, why oh why won’t ex-US rise when the PE is so much better than US??? Because it’s properly priced to account for all the problems with it. The EU, the Chinese Communist Party, UK, Brazil, India, Japan— need I say more than that to illustrate the problem? I believe in US exceptionalism. It’s the greatest nation on Earth, BY FAR! But it doesn’t even have to be exceptional to not want to buy into the political problems that those nations present. But go ahead and tilt your portfolio to ex-US. Maybe it will shine for a little while. It does from time to time. The OP said he’ll never regret being all US and to that I say I agree! Over time the OP will do great.
Yes, I bring up one of the worst decades for US stocks that was preceded by stocks reaching valuations of 40/1 after a long bull run. Sounds quite similar to today! The US could have an even longer period of negative real returns. Having even a measly 2% positive return could mean quite a lot in terms of sequence of return risk.

And unfortunately, a 60/40 investor won't be saved by Bonds like they were in the early 00s because yields are so low. You have a bad perception of risk if you think it means the same thing as "bad returns over the period I like to cherry pick". No, risk is when things feel good and you have no idea what's possibly in front of you. A false sense of confidence just because something did well in the recent past.

What's wrong with the EU, the UK, etc. etc.? Why drag politics into this as if it has any relevance to investment decisions? The US political status quo certainly isn't anything to brag about.
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Re: I'll never regret not having international funds in my portfolio

Post by Johnathon Livingston »

Nathan Drake wrote: Thu Jun 17, 2021 7:47 pm
Johnathon Livingston wrote: Thu Jun 17, 2021 7:32 pm
Nathan Drake wrote: Thu Jun 17, 2021 7:08 pm
Johnathon Livingston wrote: Thu Jun 17, 2021 7:00 pm “What this PE ratio does tell you is that stocks still have lots of room to fall--30%, just to get back to normal, much more than 30% if they "overshoot." And it also tells you that long-term returns are still likely to be sub-par.”

-Business Insider on US stocks, August 4,2011

https://www.businessinsider.com/the-cra ... ued-2011-8


Average annual return on US stocks since 2011: 14.35%
Average annual return on ex-US since 2011: 5.83%

Don’t bet against the US.
And I can play the same game but with a different period of time.

Image

Not being 100% US doesn't mean you're betting against the US. Being 0% exUS means you are betting against exUS.
My point is that people have been saying that US stocks are overvalued and won’t continue to perform for over a decade. But now that you bring up one of the worst decades for US stocks to make the case for ex-US note that the total US stock market average annual return for 2000 to end of 2009 was -.27. Ex-US was only 2.29%. And then we all know what happened from 2010 forward. Not so good for ex-US. And please don’t point to ex-US performance before 2000 back when it was not very correlated with the US.

I hold ex-US but I recognize that it’s been a lazy dog for over a decade and deserves reconsideration. The fact is ex-US is seen as risky and gets dumped hard and sold off at the first sign of trouble. It falls harder and stays down longer generally speaking because people don’t have faith in it when times get tough. You have to ask yourself, why oh why won’t ex-US rise when the PE is so much better than US??? Because it’s properly priced to account for all the problems with it. The EU, the Chinese Communist Party, UK, Brazil, India, Japan— need I say more than that to illustrate the problem? I believe in US exceptionalism. It’s the greatest nation on Earth, BY FAR! But it doesn’t even have to be exceptional to not want to buy into the political problems that those nations present. But go ahead and tilt your portfolio to ex-US. Maybe it will shine for a little while. It does from time to time. The OP said he’ll never regret being all US and to that I say I agree! Over time the OP will do great.
Yes, I bring up one of the worst decades for US stocks that was preceded by stocks reaching valuations of 40/1 after a long bull run. Sounds quite similar to today! The US could have an even longer period of negative real returns. Having even a measly 2% positive return could mean quite a lot in terms of sequence of return risk.

And unfortunately, a 60/40 investor won't be saved by Bonds like they were in the early 00s because yields are so low. You have a bad perception of risk if you think it means the same thing as "bad returns over the period I like to cherry pick". No, risk is when things feel good and you have no idea what's possibly in front of you. A false sense of confidence just because something did well in the recent past.

What's wrong with the EU, the UK, etc. etc.? Why drag politics into this as if it has any relevance to investment decisions? The US political status quo certainly isn't anything to brag about.
Political risk as it relates to investing and performance—not politics. The problem with the UK is that it can’t move its island closer to the US and away from the EU which seeks to control it or blackball it. The EU’s future is uncertain as seen with Brexit and the spread of populism through Europe as a backlash against globalist policies. The EU has overbearing regulation that it seeks to impose on its trading partners and innovation has been stifled there for a long time. You could go into the problems in the various countries that make up the EU. Japan has a population bottleneck and is closed to immigration for the most part, which creates uncertainty for its economic future. Do we really need to go into the problems with China and it’s communist system? The list of black listed Chinese companies that were funneling money to the Chinese military is growing. You know, the Chinese military that trains for war with the US? That Chinese military. China has a few other problems that we don’t have to get into—currency manipulation, corporate governance, Chinese Communist Party influence and control of companies, and then there’s the whole thing about how China treats the environment and humans.
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Re: I'll never regret not having international funds in my portfolio

Post by Picasso »

My favorite parts of these international debate threads is witnessing the pro-international fervor that resembles what I imagine an international fund salesperson would be like.
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

Picasso wrote: Thu Jun 17, 2021 9:40 pm My favorite parts of these international debate threads is witnessing the pro-international fervor that resembles what I imagine an international fund salesperson would be like.
Considering pro-international posters have plenty of US in their portfolio and simply choose to agree with the advice of the financial planning industry rather than fall into numerous trappings of novice investor mistakes, perhaps you should reconsider who the real salespersons are telling everyone it’s just fine to ignore the vast majority of the world’s equities.
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Re: I'll never regret not having international funds in my portfolio

Post by GaryA505 »

Johnathon Livingston wrote: Thu Jun 17, 2021 7:00 pm “What this PE ratio does tell you is that stocks still have lots of room to fall--30%, just to get back to normal, much more than 30% if they "overshoot." And it also tells you that long-term returns are still likely to be sub-par.”

-Business Insider on US stocks, August 4,2011

https://www.businessinsider.com/the-cra ... ued-2011-8


Average annual return on US stocks since 2011: 14.35%
Average annual return on ex-US since 2011: 5.83%

Don’t bet against the US.
And I have to wonder what the "general financial planning advice" was back then.
"Get most of it right and don't make any big mistakes."
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Re: I'll never regret not having international funds in my portfolio

Post by chipperd »

You own VFIAX or something similar, you are over 40% dependent on international business. I find it hard to believe an investor is 100% U.S. domestic.
https://www.yardeni.com/pub/mb_190626_r ... -sales.pdf
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Re: I'll never regret not having international funds in my portfolio

Post by Johnathon Livingston »

chipperd wrote: Fri Jun 18, 2021 4:36 am You own VFIAX or something similar, you are over 40% dependent on international business. I find it hard to believe an investor is 100% U.S. domestic.
https://www.yardeni.com/pub/mb_190626_r ... -sales.pdf
A lot of people don’t realize that US companies don’t just sell products overseas from an office in the US— they actually own subsidiaries located in other countries, they partner with international companies, or they own substantial shares in international companies. The argument that the international exposure of US companies is only an “international revenue stream” and not true international exposure is false. US stocks provide massive true international exposure. Look at Ford Motor Company for example. They operate in China through a partnership with a Chinese company, and the Chinese really like Ford luxury cars that probably aren’t that popular in the US—that’s international diversification. Going with the car example, You give up owning Toyota buy not buying ex-US, but that is a rational and defensible choice based on a strategic decision to avoid the unique political, currency, legal, corporate risks associated with ex-US. Defining your market for investment purposes in terms of your country and your currency is completely rational and supportable.
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Re: I'll never regret not having international funds in my portfolio

Post by JonnyDVM »

Nathan Drake wrote: Thu Jun 17, 2021 5:22 pm
GaryA505 wrote: Thu Jun 17, 2021 5:11 pm These US vs ex-US threads always end the same. Nobody knows which is better - 0%, 20%, 40%, or world market weighting (VT/VTWAX). Nobody can provide any hard evidence supporting their case for any allocation. All we know is what happened in the past. Beyond that, it's all just opinions and speculation.
The problem with your statement is that the two camps are as follows:

- 100% US
- Some combination of US and exUS

The latter is reasonable, the former goes against the general financial planning advice.

This isn’t a 100% US vs 100% exUS discussion
You’re right. We need a few 100% ex-US guys in here to spice this conversation up.

I’ll start-

“US returns will be terrible going forward. Have you LOOKED at your country lately???? The prudent path forward is to avoid US at all costs”
I’d trade it all for a little more | -C Montgomery Burns
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

Johnathon Livingston wrote: Fri Jun 18, 2021 7:26 am
chipperd wrote: Fri Jun 18, 2021 4:36 am You own VFIAX or something similar, you are over 40% dependent on international business. I find it hard to believe an investor is 100% U.S. domestic.
https://www.yardeni.com/pub/mb_190626_r ... -sales.pdf
A lot of people don’t realize that US companies don’t just sell products overseas from an office in the US— they actually own subsidiaries located in other countries, they partner with international companies, or they own substantial shares in international companies. The argument that the international exposure of US companies is only an “international revenue stream” and not true international exposure is false. US stocks provide massive true international exposure. Look at Ford Motor Company for example. They operate in China through a partnership with a Chinese company, and the Chinese really like Ford luxury cars that probably aren’t that popular in the US—that’s international diversification. Going with the car example, You give up owning Toyota buy not buying ex-US, but that is a rational and defensible choice based on a strategic decision to avoid the unique political, currency, legal, corporate risks associated with ex-US. Defining your market for investment purposes in terms of your country and your currency is completely rational and supportable.
Of course that completely depends on the line of business and industry in question.

So, it is true some U.S.-based companies own some productive assets in other countries.

But the mix of assets you get that way is very different from what you would get by investing in a diversified ex-U.S. fund.
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

Johnathon Livingston wrote: Fri Jun 18, 2021 7:26 am The argument that the international exposure of US companies is only an “international revenue stream” and not true international exposure is false. US stocks provide massive true international exposure.
It appears that the conclusion of this perspective is generally that the international exposure US stocks provide is "just right", whatever it is, even though it presumably changes over time? This seems a bit of an odd perspective to me. Is it not ever too much or too little?

Mind you, I don't accept the premise that this exposure is actually the same as owning international stocks regardless. But we'll each have to "never regret not" having some specific allocation. Having both US and international makes that easier for me, as I can be OK however things turn out.
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Re: I'll never regret not having international funds in my portfolio

Post by RJC »

Picasso wrote: Thu Jun 17, 2021 9:40 pm My favorite parts of these international debate threads is witnessing the pro-international fervor that resembles what I imagine an international fund salesperson would be like.
It's the same 3-4 folks on all of these threads. I wonder if they got together and made up a plan to do this.
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

Flannelbeard wrote: Fri Jun 18, 2021 8:45 am
chipperd wrote: Thu Jun 17, 2021 6:38 pm How would one even invest 100% domestic? Every major company is international to some extent. Silly thread.
How would one even invest 100% international? Every major international company gets US revenue to some extent. Silly thread.
The thread, particularly the title, is kinda silly. But the question of US vs International isn't. People need to figure out somehow how to allocated their equity dollars. Ideally we each will find some rationale for our chosen allocation that we find personally convincing and will let us stay the course, as the IMO worst case is to be chasing whatever won most recently.
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

Flannelbeard wrote: Fri Jun 18, 2021 8:45 am
chipperd wrote: Thu Jun 17, 2021 6:38 pm How would one even invest 100% domestic? Every major company is international to some extent. Silly thread.
How would one even invest 100% international? Every major international company gets US revenue to some extent. Silly thread.
Yeah, a diversified global portfolio isn't going to "miss" many assets in the U.S. or ex-U.S.

Indeed, I think there was something like $4.5 trillion in foreign direct investment in the United States as of 2019. Again it is concentrated in certain industries and lines of business, so if you are "missing" participating in these investments, then you are distorting your investment mix of U.S. assets.

So as soon as you vary a lot from a diversified global portfolio, you are going to start introducing distortions not just in terms of U.S. and ex-U.S. percentages, but also by industry, line of business, and so on.

Of course if you have a good reason to do a little of that, say mitigating some currency risk, then it might make sense to overweight your home country a bit--Vanguard believes this, and applies it to UK, Australian, and so on investors as well as U.S. investors.

But the farther you get from the global starting point, the more distorted your investments are by all these dimensions, not just home/not-home.

And I understand some people feel like they have good reasons for their high levels of U.S. bias. I'm skeptical of the arguments I see, but in any event they definitely should at least understand the consequences of their decision. And they are very much not simulating the mix of what you would get with a diversified global portfolio, on either the U.S. or ex-U.S. side.
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Re: I'll never regret not having international funds in my portfolio

Post by RJC »

Flannelbeard wrote: Fri Jun 18, 2021 9:09 am
RJC wrote: Fri Jun 18, 2021 8:23 am
Picasso wrote: Thu Jun 17, 2021 9:40 pm My favorite parts of these international debate threads is witnessing the pro-international fervor that resembles what I imagine an international fund salesperson would be like.
It's the same 3-4 folks on all of these threads. I wonder if they got together and made up a plan to do this.
Most of the US vs international threads, including this very one that you're participating in, are made by 100% US investors looking to reinforce their own views. There would be like 80% less threads for pro-international users to "sell" you their views in, if they weren't started by the 100% US crowd in the first place. If there's any "getting together to make a plan" it's to exhaust pro-international users with the sheer volume of these threads such that they tire of posting in them.

As for it being "the same 3-4" pro-international users, it makes sense that they'd be in the minority currently, as the US has been outperforming for over a decade. That's a long time for novice investors to get FOMO and chase performance, with a few more to follow every day as long as the trend continues.

Additionally as I alluded to earlier, there's little incentive for world market cap investors to participate in these threads. They know they're correct. There's nothing to convince themselves of so no need to start another thread about it. The few that pop into these threads do so out of a moral obligation to disrupt the 100% US echo chamber so any new or impressionable users don't get the wrong idea.
I'm seeing it the other way around. There's usually an initial thread that goes US or ex-US then the same 3-4 ex-US people flood the threads. The pro-US folks seem to be more varied except the guy that keeps pushing the 2-Fund Portfolio.

Is it truly moral obligation or do they have an ax to grind? There is a lot of fervor. :confused
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Re: I'll never regret not having international funds in my portfolio

Post by NiceUnparticularMan »

RJC wrote: Fri Jun 18, 2021 9:14 am
Flannelbeard wrote: Fri Jun 18, 2021 9:09 am
RJC wrote: Fri Jun 18, 2021 8:23 am
Picasso wrote: Thu Jun 17, 2021 9:40 pm My favorite parts of these international debate threads is witnessing the pro-international fervor that resembles what I imagine an international fund salesperson would be like.
It's the same 3-4 folks on all of these threads. I wonder if they got together and made up a plan to do this.
Most of the US vs international threads, including this very one that you're participating in, are made by 100% US investors looking to reinforce their own views. There would be like 80% less threads for pro-international users to "sell" you their views in, if they weren't started by the 100% US crowd in the first place. If there's any "getting together to make a plan" it's to exhaust pro-international users with the sheer volume of these threads such that they tire of posting in them.

As for it being "the same 3-4" pro-international users, it makes sense that they'd be in the minority currently, as the US has been outperforming for over a decade. That's a long time for novice investors to get FOMO and chase performance, with a few more to follow every day as long as the trend continues.

Additionally as I alluded to earlier, there's little incentive for world market cap investors to participate in these threads. They know they're correct. There's nothing to convince themselves of so no need to start another thread about it. The few that pop into these threads do so out of a moral obligation to disrupt the 100% US echo chamber so any new or impressionable users don't get the wrong idea.
I'm seeing it the other way around. There's usually an initial thread that goes US or ex-US then the same 3-4 ex-US people flood the threads. The pro-US folks seem to be more varied except the guy that keeps pushing the 2-Fund Portfolio.

Is it truly moral obligation or do they have an ax to grind? There is a lot of fervor.
Well, we know who started this thread. So that's one exception to what you are suggesting.

Speaking for myself, my position has always been being 100% U.S. probably won't matter much, but in extreme black swan situations it might, which is a good enough reason not to do it. I also am very worried about behavioral risks and how mere gray swan events could cause some current 100% U.S. investors to exhibit adverse behaviors.

And to the extent I see 100% U.S. investors offer arguments that seem to depend on assuming away gray swan events, that strikes me as a pretty obvious risk in their cases.

Do I consider it a moral obligation to counter those arguments? I'm not sure I would put it that strongly, but I do hope it is helpful for readers to have the logic of those arguments and their premises made explicit, including sharing actual factual information on various premises.
Da5id
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Re: I'll never regret not having international funds in my portfolio

Post by Da5id »

RJC wrote: Fri Jun 18, 2021 9:14 am I'm seeing it the other way around. There's usually an initial thread that goes US or ex-US then the same 3-4 ex-US people flood the threads. The pro-US folks seem to be more varied except the guy that keeps pushing the 2-Fund Portfolio.

Is it truly moral obligation or do they have an ax to grind? There is a lot of fervor. :confused
In my opinion, whatever the topic, an excessive focus on personalities and peoples motivations, rather than their arguments, is a bad idea. As the forum rules say.
Discussions are about issues, not people. If you disagree with an idea, go ahead and marshal all your forces against it. But do not confuse ideas with the person posting them.
I don't know that this meta discussion ever goes in a good direction...
RJC
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Re: I'll never regret not having international funds in my portfolio

Post by RJC »

Da5id wrote: Fri Jun 18, 2021 9:37 am
RJC wrote: Fri Jun 18, 2021 9:14 am I'm seeing it the other way around. There's usually an initial thread that goes US or ex-US then the same 3-4 ex-US people flood the threads. The pro-US folks seem to be more varied except the guy that keeps pushing the 2-Fund Portfolio.

Is it truly moral obligation or do they have an ax to grind? There is a lot of fervor. :confused
In my opinion, whatever the topic, an excessive focus on personalities and peoples motivations, rather than their arguments, is a bad idea. As the forum rules say.
Discussions are about issues, not people. If you disagree with an idea, go ahead and marshal all your forces against it. But do not confuse ideas with the person posting them.
I don't know that this meta discussion ever goes in a good direction...
I would agree with that if they could stick to the arguments.
asif408
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Location: Florida

Re: I'll never regret not having international funds in my portfolio

Post by asif408 »

RJC wrote: Fri Jun 18, 2021 9:14 am The pro-US folks seem to be more varied except the guy that keeps pushing the 2-Fund Portfolio.
They are more varied because there are more of them. And AFAIK there are no 100% ex-US people on here. Even among those who are pro ex-US, few if any overweight international relative to global market cap.
Nathan Drake
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Re: I'll never regret not having international funds in my portfolio

Post by Nathan Drake »

Da5id wrote: Fri Jun 18, 2021 8:11 am
Johnathon Livingston wrote: Fri Jun 18, 2021 7:26 am The argument that the international exposure of US companies is only an “international revenue stream” and not true international exposure is false. US stocks provide massive true international exposure.
It appears that the conclusion of this perspective is generally that the international exposure US stocks provide is "just right", whatever it is, even though it presumably changes over time? This seems a bit of an odd perspective to me. Is it not ever too much or too little?

Mind you, I don't accept the premise that this exposure is actually the same as owning international stocks regardless. But we'll each have to "never regret not" having some specific allocation. Having both US and international makes that easier for me, as I can be OK however things turn out.
Additionally, while US companies operate overseas and gain that international exposure, the opposite is surely not true!

These international companies like Shell, Nestle, etc are all mostly exposed to only the political risk of their home countries and they have corporate mandates to make sure their US operations are run as inefficiently as how all the workers in their home country apparently operate.

US truly is such a magical place to invest in according to the 100% US only crowd:

- Gets the international benefits. All of them!
- No currency risk! Dollars can be debased as much as possible to no consequence!
- Overseas operations are not subject to all those bad international “risks” and operate just like an ideal US only operation!
- Has lower risk AND higher expected returns, no matter the valuation!
- Has better demographics than lesser regions like EU and Japan, but doesn’t NEED the better demographics of a place like Emerging Markets which have too many risks!
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