Eliminate International?

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Dandy
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Re: Eliminate International?

Post by Dandy » Sun Oct 18, 2015 12:13 pm

By doing what you do, essentially by not holding the global market, you have practically stopped being "passive", since Investing beyond the market is a bet that you are right and the market is wrong.

So? I guess by not being fully global weighting in equities (and fixed income?) almost everyone is not passive by that definition. I'm not very lonely or concerned. The push toward global weighting of equities is a bit trendy - I'm a late adopter of most things --just about to give up my flip phone!!


While the global weighting of international equities makes some sense I think international investing is a bit more risky -- don't need/want more risk. I was a bit more international equity focused during my accumulation stage but never approaching global weighting. I'll continue a modest tilt toward international equities.

visualguy
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Re: Correction

Post by visualguy » Sun Oct 18, 2015 12:15 pm

John3754 wrote: If only you could tell me what the next 15 years will look like.
Who knows, but unless you have some good reason to believe that it will do much better, why invest in something like this?

We're talking 15 years where you went nowhere after adjusting for taxes and inflation. Life is too short for that...

The most we can say about the Boglehead strategy is that sometimes it works, and sometimes it doesn't, which is not comforting because of the long periods of times involved, and the large amounts of volatility that need to be stomached on a road that potentially leads nowhere.

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FrugalInvestor
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Re: Eliminate International?

Post by FrugalInvestor » Sun Oct 18, 2015 12:16 pm

I debated this in my own mind as well while reading here, listening to Jack, etc. As a result, I'm approximately 20% of equities in international.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

John3754
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Re: Correction

Post by John3754 » Sun Oct 18, 2015 12:27 pm

visualguy wrote:
John3754 wrote: If only you could tell me what the next 15 years will look like.
Who knows, but unless you have some good reason to believe that it will do much better, why invest in something like this?

We're talking 15 years where you went nowhere after adjusting for taxes and inflation. Life is too short for that...

The most we can say about the Boglehead strategy is that sometimes it works, and sometimes it doesn't, which is not comforting because of the long periods of times involved, and the large amounts of volatility that need to be stomached on a road that potentially leads nowhere.
You seem to be of the opinion that the Boglehead strategy, i.e. indexing, is a poor approach, so tells us, what do you think is a better approach and why?

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Re: Correction

Post by visualguy » Sun Oct 18, 2015 1:23 pm

John3754 wrote: You seem to be of the opinion that the Boglehead strategy, i.e. indexing, is a poor approach, so tells us, what do you think is a better approach and why?
Yes, I think it's a poor approach. It's hard to reach a different conclusion when looking at past performance over reasonable periods of time.

Like I said, people I know personally (not on Internet forums), don't follow this strategy and don't think that it works or makes sense. If you don't have much to invest, then there really aren't a lot of good options. You first need to make some meaningful money, so you need to focus on your career.

Once you have meaningful money to invest, there are options. I'm ok with not being completely passive, so I invest mostly in real estate, and have done much better than I've done with my Boglehead strategy money. Many people I know are doing that - it seems to be the most common approach. Others I know invest with investment management firms that do all kinds of sophisticated stuff that I don't want to pretend to understand (futures, options, currencies) in addition to investing in businesses, venture capital, etc. in the case of wealthier people. Basically, no one I personally know who is doing really well financially has meaningful money in the Boglehead strategy. It's real estate, sophisticated and risky stuff, businesses, and very safe stuff for money that needs to be preserved.

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Christine_NM
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Re: Eliminate International?

Post by Christine_NM » Sun Oct 18, 2015 2:07 pm

Percentages are slippery devils.

For years I was happy with sticking $100k in an international fund and letting it grow or shrink by itself. But this year I tried to invent an international allocation percentage for my portfolio and things got sticky. I added too much new money to international and wound up with a tax loss.

I have a plan for when Vanguard lets me back into my international fund in a couple of weeks -- do what I did many years ago. Put a fixed amount in international (that means adding 50k to the 100k I still have) and let it do its thing. Don't bother with what percentage that is of my whole stock allocation. If it really falls on its face I can do another TLH. This is placing a small bet on the planet getting its act together. We can all hope for that.

For those in their 20s and 30s I can see a 40% international allocation. But for us older folks, our time in the market is mostly past. Now we can clip our bond coupons.
17% cash 47% stock 36% bond. Retired, w/d rate 2.85%

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Taylor Larimore
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Index fund facts

Post by Taylor Larimore » Sun Oct 18, 2015 2:39 pm

John3754 wrote: You seem to be of the opinion that the Boglehead strategy, i.e. indexing, is a poor approach, so tells us, what do you think is a better approach and why?
visualguy wrote:Yes, I think it's a poor approach. It's hard to reach a different conclusion when looking at past performance over reasonable periods of time.
The S&P DowJones Indices (SPIVA) Report has been tracking the past-performance of managed funds and their index over reasonable periods of time. This is their findings:

U.S. Equity Funds outperformed by their index benchmark:
1-year: 63.7%
3-years 62.2%
5-years 78.36%
10-years 75.02%

http://www.spindices.com/documents/spiv ... r-2015.pdf

Best wishes.
Taylor
Last edited by Taylor Larimore on Sun Oct 18, 2015 3:04 pm, edited 1 time in total.
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visualguy
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Re: Eliminate International?

Post by visualguy » Sun Oct 18, 2015 2:40 pm

Christine_NM wrote:For those in their 20s and 30s I can see a 40% international allocation. But for us older folks, our time in the market is mostly past. Now we can clip our bond coupons.
When I was in my 20s and 30s I didn't have meaningful money to invest in the stock market.

When I was in my 40s, I made enough money from work for more meaningful stock market investments, and made some return, but not nearly as much as on the real estate I bought.

Now that I'm in my 50s, I don't have the time horizon to feel comfortable with the stock market for any serious money.

visualguy
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Re: Index fund facts

Post by visualguy » Sun Oct 18, 2015 2:52 pm

Taylor Larimore wrote:
John3754 wrote: You seem to be of the opinion that the Boglehead strategy, i.e. indexing, is a poor approach, so tells us, what do you think is a better approach and why?
visualguy wrote:Yes, I think it's a poor approach. It's hard to reach a different conclusion when looking at past performance over reasonable periods of time.
The S&P DowJones Indices (SPIVA) Report has been tracking the past-performance of managed funds and their index over reasonable periods of time. This is their findings:

U.S. Equity Funds outperformed by their index benchmark:
1-year: 63.7%
3-years 62.2%
5-years 78.36%
10-years 75.02%

Best wishes.
Taylor
Right, but so what? I think neither indexing nor managed stock funds are the way to go, and wasn't advocating either one. I just don't buy into stock market buy and hold. Sometimes it works, and sometimes it doesn't, even over long periods of time, such as 15 years.

It has been particularly bad in the case of international, but I don't see why it won't be the same for the US. Yes, the US does have some advantages like having the world reserve currency, but some other unique circumstances that the US had over the second half of the 20th century are gone now (even then there were 15-year periods of zero real return in the US).
Last edited by visualguy on Sun Oct 18, 2015 2:59 pm, edited 1 time in total.

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Re: Eliminate International?

Post by gkaplan » Sun Oct 18, 2015 2:53 pm

Big Dog wrote:
Why would one want to own Ford and Chevy and not also own Honda, Toyota and BMW etc
to me, the short answer is VW. Having worked extensively with international subs, I've seen the shenanigans that are acceptable behavior overseas. Three sets of books: no problem....

Chevrolet Corvair and Ford Pinto anyone? Probably others that I have forgotten.
Gordon

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sheneron
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Re: Index fund facts

Post by sheneron » Sun Oct 18, 2015 3:02 pm

visualguy wrote:Right, but so what? I think neither indexing nor managed stock funds are the way to go, and wasn't advocating either one. I just don't buy into stock market buy and hold. Sometimes it works, and sometimes it doesn't, even over long periods of time, such as 15 years.
Says the guy advocating real-estate :oops:

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Re: Index fund facts

Post by visualguy » Sun Oct 18, 2015 3:23 pm

sheneron wrote: Says the guy advocating real-estate :oops:
There was never a 15-year (or even 10-year, I believe) period over the last 60 years where real-estate didn't generate a very nice return in the areas that I'm in. There's no comparison to the stock market.

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sheneron
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Re: Index fund facts

Post by sheneron » Sun Oct 18, 2015 4:37 pm

visualguy wrote:
sheneron wrote: Says the guy advocating real-estate :oops:
There was never a 15-year (or even 10-year, I believe) period over the last 60 years where real-estate didn't generate a very nice return in the areas that I'm in. There's no comparison to the stock market.
I have a friend whos brother-in-law's uncle's friend beat the stock market with beanie babies.

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Re: Index fund facts

Post by visualguy » Sun Oct 18, 2015 4:58 pm

sheneron wrote:
visualguy wrote:
sheneron wrote: Says the guy advocating real-estate :oops:
There was never a 15-year (or even 10-year, I believe) period over the last 60 years where real-estate didn't generate a very nice return in the areas that I'm in. There's no comparison to the stock market.
I have a friend whos brother-in-law's uncle's friend beat the stock market with beanie babies.
Well, the bar isn't high for beating the stock market (particularly international) with other investments.

Buy real estate in good areas in successful centers of the US (SF Bay Area, NYC, Boston, etc.), and you're done. Yes, it does require some work and effort, but no genius insight or big risks. It just works, has worked for a very long time. No huge volatility, no 15-year periods of zero real returns, and better long-term returns.

Not saying it's the only way to do it, just one example.

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Re: Index fund facts

Post by ks289 » Sun Oct 18, 2015 7:45 pm

visualguy wrote:
sheneron wrote:
visualguy wrote:
sheneron wrote: Says the guy advocating real-estate :oops:
There was never a 15-year (or even 10-year, I believe) period over the last 60 years where real-estate didn't generate a very nice return in the areas that I'm in. There's no comparison to the stock market.
I have a friend whos brother-in-law's uncle's friend beat the stock market with beanie babies.
Well, the bar isn't high for beating the stock market (particularly international) with other investments.

Buy real estate in good areas in successful centers of the US (SF Bay Area, NYC, Boston, etc.), and you're done. Yes, it does require some work and effort, but no genius insight or big risks. It just works, has worked for a very long time. No huge volatility, no 15-year periods of zero real returns, and better long-term returns.

Not saying it's the only way to do it, just one example.
I think your examples clearly illustrate how real estate in certain markets has performed extremely well, but it is not certain that moving forward these markets will continue to outperform equities, particularly after considering transaction costs, maintenance costs, effects of leverage, etc.
Moreover, the comparison between select real estate markets and the entire stock market is not entirely fair. One could similarly cherry pick an individual stock or sector (name any stock that has skyrocketed- Tesla, Apple, whatever) as proof of the benefits of investing in the stock market-probably not a Boglehead. One could also criticize real estate by citing a lousy real estate market or simply the entire US housing market for producing zero or negative real returns.
Nobody questions that one can make money in real estate, but I think you are downplaying the risk/luck and sweat equity involved.

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Re: Eliminate International?

Post by Rodc » Sun Oct 18, 2015 7:45 pm

Big Dog wrote:
Why would one want to own Ford and Chevy and not also own Honda, Toyota and BMW etc
to me, the short answer is VW. Having worked extensively with international subs, I've seen the shenanigans that are acceptable behavior overseas. Three sets of books: no problem. Sign a multi-million deal with Russia? Easy, and they will take it over within a decade, and the investment is guaranteed to be worth pennies on the dollar.

But then, that's what allows me to sleep well at night; that, and 100% equity AA for 30+ years.
Or American Motors, or Chrysler when it went bankrupt. And wasn't it Ford with exploding Pintos and Chevy with ignition switches?

That is why you own them all, not just US.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Eliminate International?

Post by stemikger » Sun Oct 18, 2015 7:59 pm

Bogle knows most people don't agree with him on this here he is saying that. It starts at 2:45 on the video.

https://www.youtube.com/watch?v=vMj4sHjF_kA

I have been investing for retirement for over 20 years and I have never held international. I thought about adding it, but once I read Jack's chapter on Common Sense on Mutual Funds, it hit a home run with me. Every thing just made so much sense and after that I never looked back and thought about needing it. I like my two fund portfolio. One day I might even make it a one fund portfolio and put it all in the Vanguard Balanced Index.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Re: Index fund facts

Post by visualguy » Sun Oct 18, 2015 9:13 pm

ks289 wrote:I think your examples clearly illustrate how real estate in certain markets has performed extremely well, but it is not certain that moving forward these markets will continue to outperform equities, particularly after considering transaction costs, maintenance costs, effects of leverage, etc.
Moreover, the comparison between select real estate markets and the entire stock market is not entirely fair. One could similarly cherry pick an individual stock or sector (name any stock that has skyrocketed- Tesla, Apple, whatever) as proof of the benefits of investing in the stock market-probably not a Boglehead. One could also criticize real estate by citing a lousy real estate market or simply the entire US housing market for producing zero or negative real returns.
Nobody questions that one can make money in real estate, but I think you are downplaying the risk/luck and sweat equity involved.
It is not certain that these real estate markets will continue to outperform indexing the entire stock market, but it is extremely likely. The wonderful thing about owning real estate in these areas is that you benefit from people's ingenuity, creativity, and ability to make money from whatever happens to work at the time. It's where successful people want to live, they figure out ways to make money, and that benefits whoever owns real estate in the area. The only way this breaks is if successful people don't want to live there anymore (hard to imagine in the places I mentioned), or if the entire economy tanks, but then your stock market investments do even worse because people can't live in stock holdings.

I don't see the risk or the need for luck that you mentioned. Sweat equity - yes. You first need to make enough money to enable you to get into these real estate markets. Once you buy, you need to maintain and manage the property. Sometimes you want to improve it because the return on the improvements is high. It's not a passive investment, but check out VGTSX to see what passive gets you...

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Re: Eliminate International?

Post by Nathan Drake » Sun Oct 18, 2015 10:16 pm

visualguy,

The flaw in your thinking is recency bias. For those that are extremely wealthy, most own some sort of business. But you're only seeing a small fraction of those that start businesses, and whether through hard work and some combo of luck, manage to strike it rich, and they didn't do it by investing in index funds. How many people that attempted that same strategy ended up failing and bankrupt?

Then you hear about stories on this board where someone accumulates $2M net worth by taking a boglehead approach yet never made more than 70k per year. The boglehead approach may not get you filthy rich by itself, but it's probably the greatest strategy for successfully reaching reasonable financial goals and allowing most people, that don't necessarily have aspirations to generate massive wealth, the ability to live a very comfortable life and retirement.

Investments have waves of good times and bad. If the strategy of simply investing in "hot markets" worked, then why does it always inevitably fail and mean revert? The stock market bubble of the late 90s, the real estate bubble of 2006-2007, the commodities boom of 2000-2015... what if certain markets (San Francisco, etc) are now entering a real estate bubble? You buy that $1M 500 sq ft. condo in the Bay Area expecting decent returns, but then realize that this market reality is a complete fantasy built upon a house of cards?

Who knows? I don't, and that's why the boglehead approach works for me. The diversity of my investments means that at the very least I won't ever go bankrupt, and more reasonably even during very poor periods of performance (Large Cap stocks from 2000 - 2009, or International Stocks from 2007 to present), there tends to be a small annualized gain. In more typical periods, your gain will average around 4-6% real. The magic of compounding interest is that this amounts to a significant amount of money if held for a substantial period of time.

So you say International did nothing for 15 years? Well OK, that doesn't tell me what the next 15 years will do. If anything, the fact that valuations for international are more attractive than elsewhere, I'd be more inclined to invest which is precisely what I'm doing now. Unless you're an extreme pessimist and believe the world is going to implode, I have a feeling that struggling markets (particularly as large as those that comprise of the entire world outside of the US), will recover. And with that recovery, you will see stock market gains.

Such is the ebb and flow of markets. Start early, hold on, and gradually withdraw as required. The boglehead strategy is for a high probability of long term financial success, not getting rich quickly.

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Re: Eliminate International?

Post by visualguy » Sun Oct 18, 2015 11:26 pm

Nathan,

There are periods of time when the Boglehead strategy works well-enough to grow your money. I don't dispute that. Unfortunately, there are long periods of time when it doesn't, and I don't mean that it doesn't work well-enough to get rich. I mean that the real returns are simply lousy for far too long to bear, and with a really scary ride on the way.

There is no bubble in hot real estate markets such as the SF Bay Area, NYC, and Boston. Many transactions are for cash or largely cash. These areas are magnets for successful people and wealth from all over the world. Prices going up fast doesn't mean a bubble - it's not debt or speculation. The US has an increasingly divided economy of haves and have nots, with the haves congregating in the major economic centers of the US (mostly on the coasts), and these are persistent and consistent. I'm not saying that it's good or bad, it's just the way it is.

If the Boglehead thing works in the future, then great - I will rent to a Boglehead or sell to a Boglehead. If something else works, then great too - I'll rent or sell to someone doing whatever it is that happens to be working at the time. All I know is that I own properties where successful people want to live, and they will make my real estate investments successful. This realization along with the track record of real estate in these areas lets me sleep well at night, which I couldn't do if I had a substantial part of my wealth in the stock market. The stress induced by stock market volatility and its impact on my hard-earned money would be enough to harm my health. As it is, the little bit that I have in the Boglehead strategy is giving me enough grief, and I'm thinking about getting rid of it.

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Re: Eliminate International?

Post by Wayson » Mon Oct 19, 2015 12:09 am

visualguy wrote:Nathan,

There are periods of time when the Boglehead strategy works well-enough to grow your money. I don't dispute that. Unfortunately, there are long periods of time when it doesn't, and I don't mean that it doesn't work well-enough to get rich. I mean that the real returns are simply lousy for far too long to bear, and with a really scary ride on the way.
While you are correct here, the trick is to know in advance which periods are which. Few to none are able to pull that off, which is why the less-than-optimal but easy-to-follow Boglehead strategy is typically best for most people.

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Re: Eliminate International?

Post by visualguy » Mon Oct 19, 2015 12:37 am

Wayson wrote: While you are correct here, the trick is to know in advance which periods are which. Few to none are able to pull that off, which is why the less-than-optimal but easy-to-follow Boglehead strategy is typically best for most people.
The problem is that periods of stock market stagnation are too long and too crazy. Bogleheads are humans, and subject to the realities of the human life span. If I had a substantial amount of my savings in VGTSX, I would need to spend big bucks on a therapist. I can't handle 15 years of this kind of performance (rollercoaster going nowhere) - it's truly torture to go through it with all these pointless ups and downs, and I really need that money to work harder for me. Most of us don't have much money when we have time, and don't have much time when we have money.

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Re: Eliminate International?

Post by trasmuss » Mon Oct 19, 2015 4:28 am

Everyone has to determine their own comfort level. For me it has been 20% of stocks to international. In addition to comfort level the extra 9 basis points for international investing also matters. Almost tripling expenses adds up.

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Re: Eliminate International?

Post by Maynard F. Speer » Mon Oct 19, 2015 4:45 am

visualguy wrote:
Wayson wrote: While you are correct here, the trick is to know in advance which periods are which. Few to none are able to pull that off, which is why the less-than-optimal but easy-to-follow Boglehead strategy is typically best for most people.
The problem is that periods of stock market stagnation are too long and too crazy. Bogleheads are humans, and subject to the realities of the human life span. If I had a substantial amount of my savings in VGTSX, I would need to spend big bucks on a therapist. I can't handle 15 years of this kind of performance (rollercoaster going nowhere) - it's truly torture to go through it with all these pointless ups and downs, and I really need that money to work harder for me. Most of us don't have much money when we have time, and don't have much time when we have money.
The case for something like VGTSX, or emerging markets, might be that it's usually better to get in at the bottom of a market than at the top ... Of course we don't know the tops and bottoms until after the fact, but we know which markets have fallen out of favour

I think real estate's a fine investment choice - it's done better than the S&P 500 since the 70s, but not quite as well as something like Small-Cap Value or Emerging Markets ... And as has been said, you don't know in advance where those superior returns are going to be - so it may be prudent to spread your bets a bit ... If the Fed raises rates too quickly, there is presumably a risk of increased mortgage defaults and a potential sell-off

But who says you need to be diversified? Hillary Clinton made 20,000% in one year trading cattle futures
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes

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Re: Eliminate International?

Post by in_reality » Mon Oct 19, 2015 5:01 am

Maynard F. Speer wrote: But who says you need to be diversified? Hillary Clinton made 20,000% in one year trading cattle futures
Up $26,000, later lost $16,000 in a single trade. At one point down $100,000 but no margin calls were made against her ... correctly sold short and gave her a $40,000 gain in one afternoon..and once she became pregnant with Chelsea Clinton, "I lost my nerve for gambling [and] walked away from the table $100,000 ahead." Once her daughter was born in February 1980, she moved all her commodities gains into U.S. Treasury Bonds.

Trading was done on the advice of a friend and a broker who was a former professional poker player and World Series of Poker semifinalist.

Those two kept trading after Hillary got out with the friend reported to have lost $15 million and the broker/poker player bankrupt.

Yeah, so let's not conclude from Hillary's experience that diversification is not necessary. Your Mileage May Vary!

https://en.wikipedia.org/wiki/Hillary_R ... ontroversy

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Re: Eliminate International?

Post by Maynard F. Speer » Mon Oct 19, 2015 5:25 am

in_reality wrote:
Maynard F. Speer wrote: But who says you need to be diversified? Hillary Clinton made 20,000% in one year trading cattle futures
Up $26,000, later lost $16,000 in a single trade. At one point down $100,000 but no margin calls were made against her ... correctly sold short and gave her a $40,000 gain in one afternoon..and once she became pregnant with Chelsea Clinton, "I lost my nerve for gambling [and] walked away from the table $100,000 ahead." Once her daughter was born in February 1980, she moved all her commodities gains into U.S. Treasury Bonds.

Trading was done on the advice of a friend and a broker who was a former professional poker player and World Series of Poker semifinalist.

Those two kept trading after Hillary got out with the friend reported to have lost $15 million and the broker/poker player bankrupt.

Yeah, so let's not conclude from Hillary's experience that diversification is not necessary. Your Mileage May Vary!

https://en.wikipedia.org/wiki/Hillary_R ... ontroversy
I prefer being diversified too .. It's the long-term uncertainty of positive returns, as visualguy mentioned, that makes me wary of being too concentrated in any one asset class

I'm not sure real estate's any better a long-term bet than equities, but when I discovered the endowment model - as elaborate and unwieldy as it may be - it made a lot of sense to me against an unknown future
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes

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in_reality
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Re: Eliminate International?

Post by in_reality » Mon Oct 19, 2015 5:29 am

Maynard F. Speer wrote: I'm not sure real estate's any better a long-term bet than equities
I haven't finished liquidating failed 2007 real estate investments yet actually. Should have that wrapped up this year. It was all so promising!!!!

ks289
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Re: Index fund facts

Post by ks289 » Mon Oct 19, 2015 7:19 am

visualguy wrote:
ks289 wrote:I think your examples clearly illustrate how real estate in certain markets has performed extremely well, but it is not certain that moving forward these markets will continue to outperform equities, particularly after considering transaction costs, maintenance costs, effects of leverage, etc.
Moreover, the comparison between select real estate markets and the entire stock market is not entirely fair. One could similarly cherry pick an individual stock or sector (name any stock that has skyrocketed- Tesla, Apple, whatever) as proof of the benefits of investing in the stock market-probably not a Boglehead. One could also criticize real estate by citing a lousy real estate market or simply the entire US housing market for producing zero or negative real returns.
Nobody questions that one can make money in real estate, but I think you are downplaying the risk/luck and sweat equity involved.
It is not certain that these real estate markets will continue to outperform indexing the entire stock market, but it is extremely likely. The wonderful thing about owning real estate in these areas is that you benefit from people's ingenuity, creativity, and ability to make money from whatever happens to work at the time. It's where successful people want to live, they figure out ways to make money, and that benefits whoever owns real estate in the area. The only way this breaks is if successful people don't want to live there anymore (hard to imagine in the places I mentioned), or if the entire economy tanks, but then your stock market investments do even worse because people can't live in stock holdings.

I don't see the risk or the need for luck that you mentioned. Sweat equity - yes. You first need to make enough money to enable you to get into these real estate markets. Once you buy, you need to maintain and manage the property. Sometimes you want to improve it because the return on the improvements is high. It's not a passive investment, but check out VGTSX to see what passive gets you...
I hope we are both right (about a diversified equity portfolio AND real estate in select markets), since I and many family members reside near these markets. My family members also hold rental properties which have performed well, but I do not anticipate taking on this kind of responsibility in the future. It is hard enough as they age to maintain the properties themselves even with decades of experience.

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Taylor Larimore
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Location: Miami FL

San Francisco real estate bubble ?

Post by Taylor Larimore » Mon Oct 19, 2015 8:56 am

There is no bubble in hot real estate markets such as the SF Bay Area, NYC, and Boston.
Visual Guy:

I have lived in Miami for 85 years and know something about "hot real estate markets."

My wife ran a large real estate office and we have speculated in undeveloped land, an apartment building, three houses, rental property and condominium units in nine buildings Just when we thought we were making a lot of money, the market turned and we had to scramble (sell, refinance, etc.) to survive. It happened more than once.

One example: We lived in a condominium (Grove Isle) which we bought for $110,000 and 6 years later (1980) sold for $450,000 (a bubble everyone thought would last). Two years after selling, the buyer was forced to sell the same apartment for $250,000. :(

Miami, San Francisco, and Boston have all experienced rapidly increasing real estate prices (bubbles) followed by devastating declines in values. I doubt if San Francisco is an exception.

If you Google San Francisco Real Estate Bubble you will get about 800,000 hits. It may be happening now so be prepared.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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