Is now time to move into international stocks?

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trasmuss
Posts: 230
Joined: Sun Oct 26, 2008 7:10 am

Re: Is now time to move into international stocks?

Post by trasmuss » Thu Aug 03, 2017 4:07 am

When looking at valuations international stocks definitely look "cheaper" based on price to book and price to earnings ratios.

I think it pays to also look at return on equity and earnings growth rates. The domestic market excels on these measures. So yes, you are paying for a better return on equity and growth rate. Somewhat similar to comparing a value stock with a growth stock.

Having some in international stocks will reduce day to day volatility. It likely won't protect you in a big downturn. No one know how the total return figures will compare for the future. IF the value of the dollar is on a multi year downturn international stocks should do well compared to domestic stocks. For the last few months that appears to be the case; whether it will continue no one knows.

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bottlecap
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Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: Is now time to move into international stocks?

Post by bottlecap » Thu Aug 03, 2017 6:32 am

By all means market-time. It works for thousands every so often.

JT

Da5id
Posts: 2043
Joined: Fri Feb 26, 2016 8:20 am

Re: Is now time to move into international stocks?

Post by Da5id » Thu Aug 03, 2017 6:48 am

Pick an allocation and stick to it. No need to get into "is now the time" type questions, because nobody really knows (though many think they do).

Tamalak
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Re: Is now time to move into international stocks?

Post by Tamalak » Thu Aug 03, 2017 9:03 am

If "low PE" means "higher expected forward-looking returns", then don't merely move international. Shove all your money into Russia and Africa.

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Portfolio7
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Re: Is now time to move into international stocks?

Post by Portfolio7 » Thu Aug 03, 2017 11:58 am

I would suggest it depends on your investing strategy. If that is straight buy and hold, and that's the best proven strategy, then no, it's never 'time', except to rebalance to your plan AA. If you believe in modestly overweighting areas that are under-valued, and can commit to that for several years, then there is still evidence to support such a decision, imo. I wouldn't base that decision off of 6 months of returns though. That's performance chasing imo.

Full disclosure, I usually underweight international roughly 8%, but adjusted my portfolio to market weight at the beginning of this year, so that Int'l went from 42% to 50% of equity holdings. I first got comfortable with the additional risk and potential portfolio de-optimization I committed to. I think of this strategy as buying good investments when they have been on sale for roughly 3 years or more (there are other considerations as well, such as WHY they've been on sale, etc.) However, one big risk is that the asset class has simply been revalued in light of information I haven't considered. Also, I've read convincing arguments that a market weighting of international stocks does little for long term returns, and that 30% of equities is the maximum you would ever want as a US investor dependent on the dollar. The 42% I usually hold fell out of my AA methodology: I wasn't trying to pick a specific weighting, rather, international % of equities was a reasonableness check I used to validate the portfolio I'd developed. In general I try to understand and weigh the arguments, and then think again about what I am trying to accomplish, and how much volatility risk I want to take.

If you are trying to simply chase performance, that's a tough game that most people lose.
An investment in knowledge pays the best interest.

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stemikger
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Joined: Thu Apr 08, 2010 5:02 am

Re: Is now time to move into international stocks?

Post by stemikger » Thu Aug 03, 2017 5:37 pm

Noobvestor wrote:
triceratop wrote:
stemikger wrote:Nothing changes on my end. I don't own any international stocks or bonds. A simple two fund all U.S. 60/40 portfolio or one fund Vanguard Balanced Index Fund is all you need.

Stay the Course and keep it Simple!!

Vanguard Total World Stock + Total Bond Market is as simple or simpler.
The main reason I don't hold that fund is the silly higher expense ratio (partly through lack of Admiral shares) than holding Total US and Total International separately. It makes no sense as far as I can tell, but it is what it is.
Hi Noob,

I'm assuming you are talking about the Total World Fund. The Balanced Index does have Admiral shares and is not at 0.07% ER.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Johnnie
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Location: Michigan

Re: Is now time to move into international stocks?

Post by Johnnie » Thu Aug 03, 2017 7:26 pm

Allow me to restate the question:

"I've been thinking of making a change to my long term buy-and-hold equity allocation, which is to add international exposure. Based on valuations, if I'm going to do it anyway, looking back a few years from now this might turn out to have been a good time."

Even if you're not a market timer, it's hard to disagree with statement - subject to the limitation in my signature line.
"I know nothing."

TheHouse7
Posts: 314
Joined: Fri Jan 13, 2017 2:40 am

Re: Is now time to move into international stocks?

Post by TheHouse7 » Thu Aug 03, 2017 7:41 pm

Yes, a year ago :greedy
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

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