John Bogle Has Been Right About Investing In International Stocks

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MnD
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by MnD » Mon Jul 31, 2017 9:31 am

FIREchief wrote:
watchnerd wrote:
retiringwhen wrote:
YMMV and if you believed that America is not as exceptional or safe as it was before, you may weigh the balance differently.

When you see data like this...
MnD wrote:
Image
...it raises questions about how long such a divergence between global GDP share vs global market cap share can continue.
Are you implying that US GDP and global market cap share are somehow linked? Doesn't this chart just illustrate that US companies generate about fifty percent of their earnings from overseas? (which we already knew) The only way that divergence would disappear would be if somehow US companies got kicked out of all foreign countries. I guess it could happen, but good people in bad neighborhoods generally don't want the cops to leave.
Last time I checked Japan generates a bit of income from overseas and yet market cap share to GDP share has plummeted from ~3X to ~1X.
A country's global share market capitalization to their % of global GDP is a function of many variables.
The point of my original post is to point out that investors that are "only" 54% US equity share are not way out on some limb.

A hypothetical 1988 conversation 30 years ago on Bogleheads Japan might have been debating a range of "non-Japanese" stock investing for Japanese investors from 0% (don't need any! - Japan has a superior system and Japanese companies have a huge amount of international diversification of income and profits) to as much as 55% non-Japan equity (global market cap share crowd). In retrospect this range didn't bracket anything remotely close to the "right" percentage.

Our conversations here now are bracketed between 0% ex-US to perhaps 50% ex-US. I wouldn't assume that range contains the best AA for the next 30 years.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by tadamsmar » Mon Jul 31, 2017 9:37 am

I think this is an interesting article on this topic.

One issue that is raised is that the SP500 in not as international as it use to be, international earnings and investments have been declining. That issue was new to me, at least.

https://www.cnbc.com/2017/04/17/a-stubb ... ffett.html

The article says "Bogle and Buffett don't cast this advice as stone-cold or research-driven. In fact, both say it is more a preference and perhaps geared for investors who need to keep it simple rather than those who want to generate the absolute highest returns for the lowest risk." But I guess some here would dispute this claim.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by watchnerd » Mon Jul 31, 2017 9:47 am

munemaker wrote:
watchnerd wrote: US stocks are trading at an all time CAPE high, while ex-US are not.
Warren Buffet doesn't think the CAPE ratios are a problem, considering the low interest rates.

https://www.forbes.com/sites/investor/2 ... 6a0ab704ac

http://www.multpl.com/shiller-pe/

Recently there seems to be a number of posters openly bad mouthing investing advice from Jack Bogle and Warren Buffet. I value their opinions and believe they are worth considering.
Even with low interest rates, US stocks are still relatively richly valued compared to 'European ones.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by watchnerd » Mon Jul 31, 2017 9:51 am

Johnnie wrote:Alongside this thread is one discussing what high CAPE 10 ratios suggest for long term returns going forward.

This may be unfair but I sense a potential contradiction: Those who are most likely to embrace CAPE as a warning to expect low returns on US stocks for the next 10 years tend to also be Strict Rules of Bogle players who insist on 100% domestic only - TSM-and-done.
Is that actually the case?

I think valuations matter and I'm market cap weight on international.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by saltycaper » Mon Jul 31, 2017 9:51 am

munemaker wrote:
Recently there seems to be a number of posters openly bad mouthing investing advice from Jack Bogle and Warren Buffet. I value their opinions and believe they are worth considering.
Perhaps just an unfortunate word choice, but "bad mouthing" connotes a violation of allegiance, not mere criticism. I, for one, have not pledged an oath to blindly follow Bogle or Buffett on the matter of international investing or any other topic, and I hope no poster here is operating under the assumption that there is an obligation of deference to them. "Openly" also is concerning, as if dissenting voices are obscene and should be kept offstage. Again, I understand these words might have been chosen in haste, and perhaps you didn't mean to communicate such things.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by kosomoto » Mon Jul 31, 2017 10:37 am

As somebody who has been very negative on international stocks on these forums, I'd like to disclose that 20% of my portfolio is in international stocks. However, I simply can't bring myself to invest in a total market international fund given so many 20 year periods of poor returns. Therefore, I take a middle of the road approach by investing solely in Vanguard's newest international fund - the international dividend appreciation fund. This fund only invests in companies that have a 7+ year (maybe 10+, been a while since I read the methodology) history of increasing dividends year over year. This ensures you only invest in successful high quality companies and excludes a lot of the junk trading on the international market. Sorry, I don't buy that all international markets are priced as well as US markets, otherwise returns after currency adjustment would be nearly identical over the last 24 years.

Will this end up outperforming total international? Who knows, but it gives me comfort. For those unwilling to invest international for a variety of reasons, I would suggest this fund as an alternative.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by raven15 » Mon Jul 31, 2017 10:53 am

kosomoto wrote:As somebody who has been very negative on international stocks on these forums, I'd like to disclose that 20% of my portfolio is in international stocks. However, I simply can't bring myself to invest in a total market international fund given so many 20 year periods of poor returns. Therefore, I take a middle of the road approach by investing solely in Vanguard's newest international fund - the international dividend appreciation fund. This fund only invests in companies that have a 7+ year (maybe 10+, been a while since I read the methodology) history of increasing dividends year over year. This ensures you only invest in successful high quality companies and excludes a lot of the junk trading on the international market. Sorry, I don't buy that all international markets are priced as well as US markets, otherwise returns after currency adjustment would be nearly identical over the last 24 years.

Will this end up outperforming total international? Who knows, but it gives me comfort. For those unwilling to invest international for a variety of reasons, I would suggest this fund as an alternative.
That seems reasonable to me. As much as I favor some exposure to international, I also have a hard time investing in total international and choose to overweight small companies and emerging markets.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by munemaker » Mon Jul 31, 2017 11:27 am

saltycaper wrote:
munemaker wrote:
Recently there seems to be a number of posters openly bad mouthing investing advice from Jack Bogle and Warren Buffet. I value their opinions and believe they are worth considering.
Perhaps just an unfortunate word choice, but "bad mouthing" connotes a violation of allegiance, not mere criticism. I, for one, have not pledged an oath to blindly follow Bogle or Buffett on the matter of international investing or any other topic, and I hope no poster here is operating under the assumption that there is an obligation of deference to them. "Openly" also is concerning, as if dissenting voices are obscene and should be kept offstage. Again, I understand these words might have been chosen in haste, and perhaps you didn't mean to communicate such things.
You are over analyzing.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by Big Dog » Mon Jul 31, 2017 11:56 am

To quote Larry Swedroe:

Investors who abandon the strategy of broad global diversification due to recency
Where does one draw the line on recent. (The CreditSuisse report shows that the US-only success is anything but 'recent'.)

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 12:13 pm

Where does one draw the line on what expert advice to follow and quote? :happy

The are obviously some folks posting in this one that are heavily influenced by Swedroe. And, that's fine. I don't think one would be steered wrong by him and he's a fine expert to follow. But, those same folks talk down about other experts and how their advice is wrong. How does that work? Is there a, my expert is better than your expert bias? :happy

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 12:23 pm

chevca wrote:Where does one draw the line on what expert advice to follow and quote? :happy

The are obviously some folks posting in this one that are heavily influenced by Swedroe. And, that's fine. I don't think one would be steered wrong by him and he's a fine expert to follow. But, those same folks talk down about other experts and how their advice is wrong. How does that work? Is there a, my expert is better than your expert bias? :happy
There is a "this expert makes a compelling argument which convinces me and I think about the issue this way" way of approaching experts and communicating their ideas with others. Then, there are those who say "I'm with [Insert guru here]". I trust that you can see the difference.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 12:34 pm

tadamsmar wrote:I think this is an interesting article on this topic.

One issue that is raised is that the SP500 in not as international as it use to be, international earnings and investments have been declining. That issue was new to me, at least.

https://www.cnbc.com/2017/04/17/a-stubb ... ffett.html

The article says "Bogle and Buffett don't cast this advice as stone-cold or research-driven. In fact, both say it is more a preference and perhaps geared for investors who need to keep it simple rather than those who want to generate the absolute highest returns for the lowest risk." But I guess some here would dispute this claim.
Hey, that's me. Maybe I'm too simple to jump into these international threads? :happy

Interesting article. I have given thought from time to time about EM. I tend to think developed markets will give pretty close to the same returns over the long haul. So, that's part of my why bother thinking. Why not hold some EM though, as it would give me some international then and likely give different returns over the long haul. As mentioned in the article and well known though, more volatility comes with that. I'm not a fan of that part of EM. So, when I do think about that, I usually go back to keeping it simple and do nothing. :happy

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 12:40 pm

triceratop wrote:
chevca wrote:Where does one draw the line on what expert advice to follow and quote? :happy

The are obviously some folks posting in this one that are heavily influenced by Swedroe. And, that's fine. I don't think one would be steered wrong by him and he's a fine expert to follow. But, those same folks talk down about other experts and how their advice is wrong. How does that work? Is there a, my expert is better than your expert bias? :happy
There is a "this expert makes a compelling argument which convinces me and I think about the issue this way" way of approaching experts and communicating their ideas with others. Then, there are those who say "I'm with [Insert guru here]". I trust that you can see the difference.
Not really. I'd say that's just different wording of taking an experts advice.

I respect the "I'm with" type more because at least they take a stand. The other type is a little wishy washy to me. Excluding Larry and Taylor and other actual experts that post on here, most all of us are following some expert or two. I guess some of us just find it easier to admit to. :happy

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by saltycaper » Mon Jul 31, 2017 12:49 pm

chevca wrote:
Not really. I'd say that's just different wording of taking an experts advice.

I respect the "I'm with" type more because at least they take a stand. The other type is a little wishy washy to me.
You respect those who blindly follow someone without considering the merits of their advice over those who attempt to thoughtfully evaluate competing arguments? Just checking, because that's what the "different wording" distinguishes.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 12:55 pm

chevca wrote:
triceratop wrote:
chevca wrote:Where does one draw the line on what expert advice to follow and quote? :happy

The are obviously some folks posting in this one that are heavily influenced by Swedroe. And, that's fine. I don't think one would be steered wrong by him and he's a fine expert to follow. But, those same folks talk down about other experts and how their advice is wrong. How does that work? Is there a, my expert is better than your expert bias? :happy
There is a "this expert makes a compelling argument which convinces me and I think about the issue this way" way of approaching experts and communicating their ideas with others. Then, there are those who say "I'm with [Insert guru here]". I trust that you can see the difference.
Not really. I'd say that's just different wording of taking an experts advice.

I respect the "I'm with" type more because at least they take a stand. The other type is a little wishy washy to me. Excluding Larry and Taylor and other actual experts that post on here, most all of us are following some expert or two. I guess some of us just find it easier to admit to. :happy
The two are vastly different and reflects a difference in kind in evidence-based and theoretical approach to investing. The fact we don't "take a stand" is because we don't make appeals to authority and aren't dogmatic. It's not wishy-washy at all to have an open mind.

I don't follow an expert.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 1:00 pm

saltycaper wrote:
chevca wrote:
Not really. I'd say that's just different wording of taking an experts advice.

I respect the "I'm with" type more because at least they take a stand. The other type is a little wishy washy to me.
You respect those who blindly follow someone without considering the merits of their advice over those who attempt to thoughtfully evaluate competing arguments? Just checking, because that's what the "different wording" distinguishes.
That's not what I said and not what was presented. "I'm with" meaning I agree with their advice. It's pretty obvious that about no one on Bogleheads and joins in these discussions "blindly" follows anyone. To agree with someone doesn't automatically equal blindly following, and you know that.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 1:01 pm

triceratop wrote:
chevca wrote:
triceratop wrote:
chevca wrote:Where does one draw the line on what expert advice to follow and quote? :happy

The are obviously some folks posting in this one that are heavily influenced by Swedroe. And, that's fine. I don't think one would be steered wrong by him and he's a fine expert to follow. But, those same folks talk down about other experts and how their advice is wrong. How does that work? Is there a, my expert is better than your expert bias? :happy
There is a "this expert makes a compelling argument which convinces me and I think about the issue this way" way of approaching experts and communicating their ideas with others. Then, there are those who say "I'm with [Insert guru here]". I trust that you can see the difference.
Not really. I'd say that's just different wording of taking an experts advice.

I respect the "I'm with" type more because at least they take a stand. The other type is a little wishy washy to me. Excluding Larry and Taylor and other actual experts that post on here, most all of us are following some expert or two. I guess some of us just find it easier to admit to. :happy
The two are vastly different and reflects a difference in kind in evidence-based and theoretical approach to investing. The fact we don't "take a stand" is because we don't make appeals to authority and aren't dogmatic. It's not wishy-washy at all to have an open mind.

I don't follow an expert.
Does that make you an expert then? :happy

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by Big Dog » Mon Jul 31, 2017 1:07 pm

There is a "this expert makes a compelling argument which convinces me and I think about the issue this way" way of approaching experts and communicating their ideas with others. Then, there are those who say "I'm with [Insert guru here]". I trust that you can see the difference.
Why does it have to be either/or? Can't it be both?

Can't I think/believe that Bogle "makes a compelling argument which convinces me and I think [his] way about the issue..." but shorten it to say, "I'm with him"?

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 1:09 pm

Of course I'm no expert.
chevca wrote:
saltycaper wrote:
chevca wrote:
Not really. I'd say that's just different wording of taking an experts advice.

I respect the "I'm with" type more because at least they take a stand. The other type is a little wishy washy to me.
You respect those who blindly follow someone without considering the merits of their advice over those who attempt to thoughtfully evaluate competing arguments? Just checking, because that's what the "different wording" distinguishes.
That's not what I said and not what was presented. "I'm with" meaning I agree with their advice. It's pretty obvious that about no one on Bogleheads and joins in these discussions "blindly" follows anyone. To agree with someone doesn't automatically equal blindly following, and you know that.
Yea, but you're the one saying you respect more those who side with an individual rather than having a healthy dose of skepticism and being convinced by arguments and discussing points of view, not personalities. It's just very curious.
That's not what I said and not what was presented. "I'm with" meaning I agree with their advice. It's pretty obvious that about no one on Bogleheads and joins in these discussions "blindly" follows anyone. To agree with someone doesn't automatically equal blindly following, and you know that.
I am sure I can find more but for now

viewtopic.php?t=163218#p2451383
viewtopic.php?t=163218#p2451633
viewtopic.php?t=216735#p3335398
viewtopic.php?t=172933#p2616549
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 1:11 pm

Big Dog wrote:
There is a "this expert makes a compelling argument which convinces me and I think about the issue this way" way of approaching experts and communicating their ideas with others. Then, there are those who say "I'm with [Insert guru here]". I trust that you can see the difference.
Why does it have to be either/or? Can't it be both?

Can't I think/believe that Bogle "makes a compelling argument which convinces me and I think [his] way about the issue..." but shorten it to say, "I'm with him"?
I guess, but why would you expect anyone to assign value to a statement like "I'm with him"? Making the right decision is not matter of counting the number of Bogleheads who think a particular way. So, why would one think that posting that would convince anyone? The fact one think someone might assign value that way indicates to me some are not thinking about diversification and international from a first-principles point of view.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 1:21 pm

I fail to see your point with any of that. I didn't see anywhere in those links anyone saying they "blindly follow" anyone, admit to never having looked into or considered another way of investing, nor say that any other way of investing is wrong. Just that they're "with" someone, like they're advice, and choose that for themselves.

What's wrong with that?

Do you really believe that folks able to post and discuss these matters just tripped upon Mr. Bogle and thought, yep, nothing else matter whatever he says goes?

Did you search for anyone posting they're "with" Swedroe or any other expert on a topic? Is that more acceptable to be "with" an expert, as long as it's not Bogle or Buffett?

You guys a really reaching to make your arguments about this vast difference in what was posted about following expert advice. It's not that different. :wink:

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by Big Dog » Mon Jul 31, 2017 1:22 pm

I guess, but why would you expect anyone to assign value to a statement like "I'm with him"?
I don't expect anyone to assign a value to what I say on an anonymous internet board. If they do.... :oops:
Making the right decision..
Assuming that there is a "right" decision and that their 'right' decision matches yours.
The fact you think someone might assign value that way indicates to me some are not thinking about diversification and international from a first-principles point of view.
Perhaps they are, but just not your point of view. Perhaps their "first principles" (whatever that means) more highly value home-country bias since it allows them to sleep better at night. Perhaps they are more than happy to forego a little more diversification as a result of that HCB, particularly given the historical facts (per Credit Suisse report). Perhaps they do not have a Fear of Missing Out (FOMO) of an uptick in International's reversion to the mean, which itself is a bias, is it not?

Sure, Bogle admits that he is going against the grain with his suggestion of 'international not necessary'. He points out good reasons for his suggestion.

Quite frankly, much of what I've read on this thread posted by the Internationalists is just not that persuasive to me. In the 23 countries studied, 2 beat the US. (Yeah, I wish I had invested in South Africa!) But 20 countries were lower than US. Combining 2+20 = Global ex US is still < 1 US for many, many years (just not "recent").
Last edited by Big Dog on Mon Jul 31, 2017 1:29 pm, edited 2 times in total.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by minesweep » Mon Jul 31, 2017 1:27 pm

dos palomas wrote:Wow. Past performance is no guarantee of future results.

This one is destined to go to 10+ pages.
10 pages it is. Only took 8 days.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 1:29 pm

I'm only posting this because I thought it was funny. And yes, searching for Larry instead of Swedroe yields a few more results.

Image
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 1:39 pm

So, there are other blind followers out there? :happy

I like some of Bogle's advice, some of Larry's advice, some of Taylor's and those that wrote the "Guide to Investing", and some advice from other experts as well. I also discard some advice from each. I take what I like from each, what I can use, and what makes sense to me. I am nowhere near an expert and have no issue saying I like and use advice from an expert on whatever topic... or, I'm "with" an expert on a topic.

I also in no way would ever try "convince" someone to do things my way in saving and investing. It's a very individual thing.

In these international threads, how much convincing has one side ever done to the other anyway? :happy

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by saltycaper » Mon Jul 31, 2017 1:40 pm

chevca wrote:
That's not what I said and not what was presented. "I'm with" meaning I agree with their advice. It's pretty obvious that about no one on Bogleheads and joins in these discussions "blindly" follows anyone. To agree with someone doesn't automatically equal blindly following, and you know that.
Then let me put it this way, chevca. At times people offer no support for their argument other than they agree with [expert]. If they are aware of the reasons behind [expert's] advice, and if they have considered competing advice with an open mind, they aren't letting on. Do people exhibit this behavior with experts other than Bogle? Certainly. But, for this tendency, Bogle acolytes seem to predominate. Perhaps that shouldn't be surprising for a site called "Bogleheads." Still, when he is called "St. Jack", or unprovable statements such as, "Bogle knows more about investing than anybody on this forum," are thrown around to justify viewpoints, it makes me cringe.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by saltycaper » Mon Jul 31, 2017 1:44 pm

chevca wrote:
In these international threads, how much convincing has one side ever done to the other anyway? :happy
Beneficiaries are likely silent. Or, among those who speak, they might hesitate to admit to changes. That's common in any contentious debate. But before I said much here, the conversation was very helpful to me in determining my AA.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by chevca » Mon Jul 31, 2017 1:51 pm

saltycaper wrote:Perhaps that shouldn't be surprising for a site called "Bogleheads."
I was going to ask, you know where you are, right? :D

I'd say it's a pretty fair bet the folks on Bogleheads have read into things investing beyond what Mr. Bogle has to say about it all. Just because they don't lay out each and every thing they've read or looked into doesn't mean they're blindly following him or anyone else. IMO anyway. Maybe some are blindly following? At least they aren't blindly following someone saying they can make them rich on penny stocks, right? :happy

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by timmy » Mon Jul 31, 2017 1:52 pm

Doesn't investing in something like VT solve the big concern (being wrong)? If international market grows more the US market, then VT will hold more international. The same is true for the US.
Vanguard Total World Stock ETF (VT) ... Seeks to track the performance of the FTSE Global All Cap Index, which covers both well-established and still-developing markets. Has high potential for growth, but also high risk; share value may swing up and down more than U.S. or international ...

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by avalpert » Mon Jul 31, 2017 2:00 pm

timmy wrote:Doesn't investing in something like VT solve the big concern (being wrong)? If international market grows more the US market, then VT will hold more international. The same is true for the US.
Vanguard Total World Stock ETF (VT) ... Seeks to track the performance of the FTSE Global All Cap Index, which covers both well-established and still-developing markets. Has high potential for growth, but also high risk; share value may swing up and down more than U.S. or international ...
Yes, investing at market weights between countries guarantees you will get you the average return of global equities - just like market weights between sectors or individual companies not withstanding the special pleading some choose to do when it comes to the US. That is a perfectly rational portfolio selection.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by Munir » Mon Jul 31, 2017 2:33 pm

I blindly and totally agree with chevca :happy :D . Am I in trouble now?

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by saltycaper » Mon Jul 31, 2017 3:41 pm

Munir wrote:I blindly and totally agree with chevca :happy :D . Am I in trouble now?
Well, it's hard to argue that tribalism has not aided in the development and survival of the human species for thousands of years. Just make sure you aren't following the guy who's following the mastodon off the cliff. :D
Quod vitae sectabor iter?

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by Big Dog » Mon Jul 31, 2017 4:05 pm

But, for this tendency, Bogle acolytes seem to predominate.
Correlatoin <> causation.

And don't forget, with most of the academic research and Retirement Date funds all recommending/holding International equities, Jack is practically alone in his comments regarding that topic. Thus, it is no surprise that those of us who eschew the recommendations (of the academic research and Retirement Date funds) 'predominately' align with Bogle. (or does he align with us? :mrgreen: )

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by saltycaper » Mon Jul 31, 2017 4:17 pm

Big Dog wrote:
But, for this tendency, Bogle acolytes seem to predominate.
Correlatoin <> causation.

And don't forget, with most of the academic research and Retirement Date funds all recommending/holding International equities, Jack is practically alone in his comments regarding that topic. Thus, it is no surprise that those of us who eschew the recommendations (of the academic research and Retirement Date funds) 'predominately' align with Bogle. (or does he align with us? :mrgreen: )
Hmm... I didn't say or mean to imply one thing caused another, and the observation was general and not specific to international investing. Not that everyone who agrees with Bogle is guilty, but action without any understanding still is a "wrong" strategy, IMO, whatever the investment topic.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by tadamsmar » Mon Jul 31, 2017 4:28 pm

This looks to be the actual source interview that was referenced in the link Taylor posted in the OP:

https://www.bloomberg.com/news/articles ... s-j3su6bj5

The full (or more complete) interview extends and amplifies his remarks a good bit.

“Every single person I think I have ever talked to tells me I am wrong in this,” Bogle said. “If you believe in the majority, you can just throw my opinion in the waste basket. But on the other hand, I was brought up in this business and I am saying ‘the crowd is always wrong.’”

The crowd was certainly wrong about index funds!

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 4:32 pm

tadamsmar wrote:This looks to be the actual source interview that was referenced in the link Taylor posted in the OP:

https://www.bloomberg.com/news/articles ... s-j3su6bj5

The full (or more complete) interview extends and amplifies his remarks a good bit.

“Every single person I think I have ever talked to tells me I am wrong in this,” Bogle said. “If you believe in the majority, you can just throw my opinion in the waste basket. But on the other hand, I was brought up in this business and I am saying ‘the crowd is always wrong.’”

The crowd was certainly wrong about index funds!
Or, you could say that Bogle followed the investing crowds by explicit design with a market cap weighted index fund. It shows the limitations of pithy expressions that one can make either case. I prefer more substance.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by ruralavalon » Mon Jul 31, 2017 5:00 pm

triceratop wrote:
tadamsmar wrote:This looks to be the actual source interview that was referenced in the link Taylor posted in the OP:

https://www.bloomberg.com/news/articles ... s-j3su6bj5

The full (or more complete) interview extends and amplifies his remarks a good bit.

“Every single person I think I have ever talked to tells me I am wrong in this,” Bogle said. “If you believe in the majority, you can just throw my opinion in the waste basket. But on the other hand, I was brought up in this business and I am saying ‘the crowd is always wrong.’”

The crowd was certainly wrong about index funds!
Or, you could say that Bogle followed the investing crowds by explicit design with a market cap weighted index fund. It shows the limitations of pithy expressions that one can make either case. I prefer more substance.
Paul Samuelson, Burton Malkiel and others suggested index investing. Wells Fargo and American National Bank started index funds for institutional clients in 1973. John Bogle started the first index fund for retail investors at the end of 1975.

Thereafter I think it's correct to say that the crowd followed Bogle.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by triceratop » Mon Jul 31, 2017 5:09 pm

ruralavalon wrote:
triceratop wrote:
tadamsmar wrote:This looks to be the actual source interview that was referenced in the link Taylor posted in the OP:

https://www.bloomberg.com/news/articles ... s-j3su6bj5

The full (or more complete) interview extends and amplifies his remarks a good bit.

“Every single person I think I have ever talked to tells me I am wrong in this,” Bogle said. “If you believe in the majority, you can just throw my opinion in the waste basket. But on the other hand, I was brought up in this business and I am saying ‘the crowd is always wrong.’”

The crowd was certainly wrong about index funds!
Or, you could say that Bogle followed the investing crowds by explicit design with a market cap weighted index fund. It shows the limitations of pithy expressions that one can make either case. I prefer more substance.
Paul Samuelson, Burton Malkiel and others suggested index investing. Wells Fargo and American National Bank started index funds for institutional clients in 1973. John Bogle started the first index fund for retail investors at the end of 1975.

Thereafter I think it's correct to say that the crowd followed Bogle.
The history of the first index fund is besides the point, which is that with a market cap weighted index fund you are accepting the prices set by the crowd.
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by LadyGeek » Mon Jul 31, 2017 6:05 pm

Chuffly wrote:...My apologies, that "% matplotlib inline" line only works if you use the jupyter notebooks. Probably should have removed that for folks that don't use jupyter notebooks and instead run straight python scripts.

Try the script below instead (alternatively, just delete or comment out the "% matplotlib inline" line from the previous script you tried). Also, please note that the below script is Python 3 - print statement needs to be modified if run in Python 2.

And let me know if you have any feedback on how I set up the calculations! Shiller's data set seemed like the best one to come up with the total return stretching back to 1870. Unfortunately, I couldn't find a readily available data set on Quandl with the annual real return (with dividends reinvested) so I had to calculate that part myself in the script. I did dividend reinvestment annually, as I didn't know of a better way to do that accurately - this was the first time I've really worked with Shiller's data, but I presumed his "Real Dividend" column was the TTM dividends paid so any more frequent dividend reinvestment than annually seemed like it would create problems.

So the "TTM Real Return" column was the change in the "Real Price" over the preceding 12 months (one year of real price gains) + plus the corresponding Real Dividend (presuming it was TTM), then dividing that sum of those two numbers by the Real Price from 12 months ago.

Code: Select all

import quandl
from matplotlib import style
style.use('fivethirtyeight')

Shiller = quandl.get("YALE/SPCOMP")

Shiller["TTM Real Return"] = (100*((Shiller["Real Price"].diff(12) + Shiller["Real Dividend"])/Shiller["Real Price"].shift(12)))
Annual_Shiller = Shiller[["Real Price", "Real Dividend", "TTM Real Return"]].filter(like='-12-31', axis=0)    
Annual_Shiller["TR Index"] = ((Annual_Shiller["TTM Real Return"]+100)/100).cumprod()

lookback = 24
Annual_Shiller[str(lookback) + " Yr Ret"] = ((Annual_Shiller["TR Index"].pct_change(lookback)+1)**(1/lookback)-1)*100

print(Annual_Shiller[Annual_Shiller[str(lookback) + " Yr Ret"] < 3.16])

Annual_Shiller[str(lookback) + " Yr Ret"].plot()
After downloading a missing plot library (tkinter), the Quandl API came to a screeching halt with:

Code: Select all

 File "/usr/lib64/python2.7/site-packages/quandl/connection.py", line 85, in handle_api_error
    raise klass(message, resp.status_code, resp.text, resp.headers, code)
quandl.errors.quandl_error.LimitExceededError: (Status 429) (Quandl Error QELx01) You have exceeded the anonymous user limit of 50 calls per day. To make more calls today, please register for a free Quandl account and then include your API key with your requests.
I'm not interested in registering for the API, so I'll try it again tomorrow.

Hang on, you're looking for historical performance back to 1870? Have I got a spreadsheet for you: Simba's backtesting spreadsheet

If you have questions on your equations, by all means ask in the support thread. You'll get plenty of help. Simba's backtesting spreadsheet [a Bogleheads community project]
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by tadamsmar » Mon Jul 31, 2017 6:45 pm

Buffet's wife may be 100% domestic after he says his "rosebud".

But not his business:

https://www.cnbc.com/2015/11/16/the-war ... rseas.html

I guess you could say that Buffet trusts US companies to do your international investing for you.
Last edited by tadamsmar on Tue Aug 01, 2017 8:58 am, edited 1 time in total.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by Chuffly » Mon Jul 31, 2017 9:56 pm

LadyGeek wrote:
Chuffly wrote:...My apologies, that "% matplotlib inline" line only works if you use the jupyter notebooks. Probably should have removed that for folks that don't use jupyter notebooks and instead run straight python scripts.

Try the script below instead (alternatively, just delete or comment out the "% matplotlib inline" line from the previous script you tried). Also, please note that the below script is Python 3 - print statement needs to be modified if run in Python 2.

And let me know if you have any feedback on how I set up the calculations! Shiller's data set seemed like the best one to come up with the total return stretching back to 1870. Unfortunately, I couldn't find a readily available data set on Quandl with the annual real return (with dividends reinvested) so I had to calculate that part myself in the script. I did dividend reinvestment annually, as I didn't know of a better way to do that accurately - this was the first time I've really worked with Shiller's data, but I presumed his "Real Dividend" column was the TTM dividends paid so any more frequent dividend reinvestment than annually seemed like it would create problems.

So the "TTM Real Return" column was the change in the "Real Price" over the preceding 12 months (one year of real price gains) + plus the corresponding Real Dividend (presuming it was TTM), then dividing that sum of those two numbers by the Real Price from 12 months ago.

Code: Select all

import quandl
from matplotlib import style
style.use('fivethirtyeight')

Shiller = quandl.get("YALE/SPCOMP")

Shiller["TTM Real Return"] = (100*((Shiller["Real Price"].diff(12) + Shiller["Real Dividend"])/Shiller["Real Price"].shift(12)))
Annual_Shiller = Shiller[["Real Price", "Real Dividend", "TTM Real Return"]].filter(like='-12-31', axis=0)    
Annual_Shiller["TR Index"] = ((Annual_Shiller["TTM Real Return"]+100)/100).cumprod()

lookback = 24
Annual_Shiller[str(lookback) + " Yr Ret"] = ((Annual_Shiller["TR Index"].pct_change(lookback)+1)**(1/lookback)-1)*100

print(Annual_Shiller[Annual_Shiller[str(lookback) + " Yr Ret"] < 3.16])

Annual_Shiller[str(lookback) + " Yr Ret"].plot()
After downloading a missing plot library (tkinter), the Quandl API came to a screeching halt with:

Code: Select all

 File "/usr/lib64/python2.7/site-packages/quandl/connection.py", line 85, in handle_api_error
    raise klass(message, resp.status_code, resp.text, resp.headers, code)
quandl.errors.quandl_error.LimitExceededError: (Status 429) (Quandl Error QELx01) You have exceeded the anonymous user limit of 50 calls per day. To make more calls today, please register for a free Quandl account and then include your API key with your requests.
I'm not interested in registering for the API, so I'll try it again tomorrow.

Hang on, you're looking for historical performance back to 1870? Have I got a spreadsheet for you: Simba's backtesting spreadsheet

If you have questions on your equations, by all means ask in the support thread. You'll get plenty of help. Simba's backtesting spreadsheet [a Bogleheads community project]
I will certainly take a look at that Spreadsheet and compare numbers. And I do believe I will be dropping into the support thread.

By the way, I highly recommend signing up for an account with Quandl. While they do have some subscription-only data sets, there is still a wealth of data that is absolutely free. It's a great resource if you like sifting through financial/economic data.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by carofe » Tue Aug 01, 2017 9:54 am

LOL, this thread has been on fire, for days.
US Total Stock Market + Intermediate Term Bond. That's it.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by watchnerd » Tue Aug 01, 2017 10:05 am

Most of the critiques around international seem to center around its relative performance compared to US TM over the last 3 decades or so.

Given that future performance is unknowable, this leads me to a thought experiment:

If International TM and US TM were to perform nearly identically in the future, is there value in holding both?
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Re: John Bogle Has Been Right About Investing In International Stocks

Post by sreynard » Tue Aug 01, 2017 10:25 am

watchnerd wrote:Most of the critiques around international seem to center around its relative performance compared to US TM over the last 3 decades or so.

Given that future performance is unknowable, this leads me to a thought experiment:

If International TM and US TM were to perform nearly identically in the future, is there value in holding both?
Yes there would be a benefit. It would increase diversification without significant cost.

Now if gold under performed common stock for 200 years, would there be a benefit to equal weight gold? :twisted:

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by sreynard » Tue Aug 01, 2017 10:28 am

Munir wrote:I blindly and totally agree with chevca :happy :D . Am I in trouble now?
Oops! Missed this one!

I'm with chevca! Chevca for guru! :sharebeer

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by tadamsmar » Tue Aug 01, 2017 10:29 am

watchnerd wrote:Most of the critiques around international seem to center around its relative performance compared to US TM over the last 3 decades or so.

Given that future performance is unknowable, this leads me to a thought experiment:

If International TM and US TM were to perform nearly identically in the future, is there value in holding both?
Probably is, based on an efficient frontier calculation based on the past 24 years.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by asif408 » Tue Aug 01, 2017 10:51 am

watchnerd wrote:Most of the critiques around international seem to center around its relative performance compared to US TM over the last 3 decades or so.

Given that future performance is unknowable, this leads me to a thought experiment:

If International TM and US TM were to perform nearly identically in the future, is there value in holding both?
Yes, assuming their correlations are not 1 during that time, which historically has not been the case. You could potentially have a higher return that either US or international individually if you rebalance periodically. In fact, if the correlations are lower than they have been in the recent past, international could have a slightly lower return than US, but a mix of the two rebalanced could still return more than a US only portfolio. Bill Bernstein showed this in one of his books.

The low correlation and rebalancing benefit is the same reason he recommends things like precious metals equities, which are poor investments on their own. But these types of investments can increase an overall portfolio's return, even though its return when viewed in isolation is several percent less than the market. Basically, if you add an asset class to a portfolio, the lower its correlation with whatever you are adding it to, the less the expected return needs to be for that additional asset class compared to your original investment to provide a benefit. Of course, correlations and expected returns vary over time, so caveat emptor.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by retireearly » Tue Aug 01, 2017 12:43 pm

watchnerd wrote:
retiringwhen wrote: But in the end, if you are going to make a bet, you gotta decide, will the US outperformance over the long-run continue or are we just at one end of the pendulum swing?
Amongst graying societies, the US will probably continue to perform better than its demographic cohort group. However, I would posit that's only of tertiary importance.

As they say, "demographics is destiny", and when I look at data like this, it becomes clear that capturing a significant portion of the world's growing, and young, population will be key to future profits. Facebook, for example, knows this, as do other American-based companies, but I have no doubt there will be strong competitors with origins outside the US:

Image

Image

Now, if you're over 70, maybe you don't care about this because you're not likely to be breathing in 2050. Bogle and Buffet fall into this camp. Zuckerberg likely doesn't.

Maybe US vs International is more related to the age of the investor?

And maybe that's entirely rational...
That is a great chart and should remind us all that the UK and Germany were dominant countries and the US an "emerging market" (part hyperbole, part truth!). In all seriousness, what that chart screams is for anyone just starting out investing, maybe in early 20%'s, go-long EM and buy any/all corrections. IN fact, even in my mid-40's, it makes me think Frontier Markets might be the new Emerging Markets as we know them today.
Age:45, about to be single for first time since 1995. Kids 8/13. Current AA 70/30, Desired stock AA 50/50, overweight EM, Int SC and US SCV.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by retireearly » Tue Aug 01, 2017 12:52 pm

asif408 wrote:
watchnerd wrote:Most of the critiques around international seem to center around its relative performance compared to US TM over the last 3 decades or so.

Given that future performance is unknowable, this leads me to a thought experiment:

If International TM and US TM were to perform nearly identically in the future, is there value in holding both?
Yes, assuming their correlations are not 1 during that time, which historically has not been the case. You could potentially have a higher return that either US or international individually if you rebalance periodically. In fact, if the correlations are lower than they have been in the recent past, international could have a slightly lower return than US, but a mix of the two rebalanced could still return more than a US only portfolio. Bill Bernstein showed this in one of his books.

The low correlation and rebalancing benefit is the same reason he recommends things like precious metals equities, which are poor investments on their own. But these types of investments can increase an overall portfolio's return, even though its return when viewed in isolation is several percent less than the market. Basically, if you add an asset class to a portfolio, the lower its correlation with whatever you are adding it to, the less the expected return needs to be for that additional asset class compared to your original investment to provide a benefit. Of course, correlations and expected returns vary over time, so caveat emptor.
Good post...

I've read about a dozen posts that say "but Int has not done anything in 24 years" and even if that were true, by holding both US/INT, one could have bought US real low while rebalancing from their Int that did real well in the entire first decade of the 21st century. Also, I'm not sure why I keep reading "24 years" Int not doing anything. That is a cherry picked #. If one goes back just about 5 years, then it is the US that trailed Int.
Age:45, about to be single for first time since 1995. Kids 8/13. Current AA 70/30, Desired stock AA 50/50, overweight EM, Int SC and US SCV.

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Re: John Bogle Has Been Right About Investing In International Stocks

Post by watchnerd » Tue Aug 01, 2017 1:19 pm

retireearly wrote:I've read about a dozen posts that say "but Int has not done anything in 24 years" and even if that were true, by holding both US/INT, one could have bought US real low while rebalancing from their Int that did real well in the entire first decade of the 21st century. Also, I'm not sure why I keep reading "24 years" Int not doing anything. That is a cherry picked #. If one goes back just about 5 years, then it is the US that trailed Int.
Meaning go back 29 years from present or 5 years from present?
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