I own no international stocks. Can you guess why?

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Taylor Larimore
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I own no international stocks. Can you guess why?

Post by Taylor Larimore » Sun Aug 20, 2017 10:43 am

Bogleheads:

How much international stock should we own is a much discussed subject. Hoping to help, a year ago I made a post suggesting 20% of equity.

I once allocated over 30% of my equity in international stocks. I have gradually reduced my international allocation to 00% . Can you guess why?

I'll answer tomorrow.

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

Atomic
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Re: I own no international stocks. Can you guess why?

Post by Atomic » Sun Aug 20, 2017 10:47 am

For simplicity. You now use a 2 fund portfolio, down from 3.

alwayshedge
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Re: I own no international stocks. Can you guess why?

Post by alwayshedge » Sun Aug 20, 2017 10:47 am

Our globally oriented domestic corporations already provide enough diversification.

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Re: I own no international stocks. Can you guess why?

Post by Iliketoridemybike » Sun Aug 20, 2017 10:52 am

You didn't want the almost 18% return they've provided YTD?

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Tycoon
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Re: I own no international stocks. Can you guess why?

Post by Tycoon » Sun Aug 20, 2017 10:52 am

Because you have no need to own international stocks.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

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reriodan
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Re: I own no international stocks. Can you guess why?

Post by reriodan » Sun Aug 20, 2017 10:56 am

Speculation based on past performance.

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nedsaid
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Re: I own no international stocks. Can you guess why?

Post by nedsaid » Sun Aug 20, 2017 10:56 am

Taylor, my guess is good old recency bias. US Stocks have done so well in recent years that some Bogleheads believe there is no need for International. I believe this to be a mistake. I was just posting in another thread about the 1989 Japanese bubble and the subsequent burst. In 1989, Japanese investors could crow about their big multi-national companies that were the envy of the world, the number two economy in the world soon to overtake the US, and a stock market that performed so well that there was no need to invest anywhere else. Why would a Japanese investor own US Stocks when Japanese companies did so much business in the US? Why would Japanese investors take currency risk?

As much as I like and respect John Bogle, I just think he is plain old wrong. It is a mistake to have all your investments in one country, even your own.
A fool and his money are good for business.

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Re: I own no international stocks. Can you guess why?

Post by aristotelian » Sun Aug 20, 2017 10:56 am

Because international stocks have done well lately and it is a good time to sell...Just kidding, I have no idea. Seems like something one should do based on the principle of diversification.

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Re: I own no international stocks. Can you guess why?

Post by The Wizard » Sun Aug 20, 2017 10:58 am

Because international stocks no longer contribute to portfolio diversity?
Attempted new signature...

am
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Re: I own no international stocks. Can you guess why?

Post by am » Sun Aug 20, 2017 10:59 am

Because owning only US simplifies the portfolio and is good enough and will beat most investors and stock pickers. More than One road to Dublin.

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Re: I own no international stocks. Can you guess why?

Post by bilperk » Sun Aug 20, 2017 11:00 am

Because you put your assets In an Irrevocable Trust.
Bill

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Re: I own no international stocks. Can you guess why?

Post by rebellovw » Sun Aug 20, 2017 11:02 am

This last little drop wasn't too bad - my international, bonds and company stock were slightly up. I'm at about 12% and I may increase that.

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celia
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Re: I own no international stocks. Can you guess why?

Post by celia » Sun Aug 20, 2017 11:05 am

You gave it away (and now can avoid paying capital gains on it).

And because Jack/John Bogle says it isn't necessary.

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Re: I own no international stocks. Can you guess why?

Post by Christine_NM » Sun Aug 20, 2017 11:08 am

Three guesses:

1. You got tired of paying more for lower returns.

2. The Dollar Index is falling a bit so International is more expensive to buy now. (That's not a reason to sell though.)

3. You are considering your heirs' and your portfolios as one. They have a lot more international than 20% so you don't need your 20% anymore.

I don't actually think any of these is your personal reason, but I've discovered that it does not matter much whether a portfolio has international. That said, after 2 years with no international, this year I added a managed international fund, VWILX. I like having a few bucks in BABA and Baidu, it's cool. Sometimes it zigs when the US Total Market zags.
10% cash 45% stock 45% bond. Retired, w/d rate 1.5%

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Re: I own no international stocks. Can you guess why?

Post by Buddtholomew » Sun Aug 20, 2017 11:11 am

We get it Taylor, but enough with the anti-international threads already. I am 55/45 international with VWIGX (international growth fund) +30% YTD.

If you want diversification you can't pick and choose what to invest in. That's the whole point.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Re: I own no international stocks. Can you guess why?

Post by AlohaJoe » Sun Aug 20, 2017 11:12 am

Because you retired in the single best year to retire in 180 years of US stock market history and it would have allowed you withdraw over 8% inflation adjusted and still be fine, so your asset allocation and withdrawal strategy didn't matter?

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Re: I own no international stocks. Can you guess why?

Post by The Wizard » Sun Aug 20, 2017 11:16 am

Guess #2: due to following a modified age in bonds formula, you now own no stocks at all! 100% bonds!
Attempted new signature...

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Re: I own no international stocks. Can you guess why?

Post by bilperk » Sun Aug 20, 2017 11:17 am

nedsaid wrote:
Sun Aug 20, 2017 10:56 am
Taylor, my guess is good old recency bias. US Stocks have done so well in recent years that some Bogleheads believe there is no need for International. I believe this to be a mistake. I was just posting in another thread about the 1989 Japanese bubble and the subsequent burst. In 1989, Japanese investors could crow about their big multi-national companies that were the envy of the world, the number two economy in the world soon to overtake the US, and a stock market that performed so well that there was no need to invest anywhere else. Why would a Japanese investor own US Stocks when Japanese companies did so much business in the US? Why would Japanese investors take currency risk?

As much as I like and respect John Bogle, I just think he is plain old wrong. It is a mistake to have all your investments in one country, even your own.
Mr. Bogle has not been wrong. The long term returns of asset classes, large, value, small, ... have be almost exactly the same, just as he said they likely would. And just like he said rebalancing wouldn't make much difference in return, it hasn't.

https://seekingalpha.com/article/404186 ... urn-stocks
Bill

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Re: I own no international stocks. Can you guess why?

Post by LarryG » Sun Aug 20, 2017 11:18 am

Taylor,
I find it interesting that you have changed your thoughts about the need to hold international funds. I recall our conversations about this several years ago.
A few reasons may be: 1. The 5 year return for VTSAX is 14.54% compared to 7.68% for VTIAX. 2. The expense ratio for VTSAX is .04%, VTIAX .11% (not much , but every little bit helps) 3.The risk for VTIAX is slightly higher. 4. The benefit of holding international funds at our age is minimal. 5. The 35% international investment by the S.P. 500 companies gives you all the international exposure you need. 6. After all of these years, you have come around to John Bogle's view of holding international funds.
My best wishes.
LarryG

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Re: I own no international stocks. Can you guess why?

Post by triceratop » Sun Aug 20, 2017 11:21 am

Because you retired and decided to travel the world, so you have no country to call international.

Or, you know, home and recency bias.

Shall I predict another 10+ page thread? But why did you sell your international? Last time you said you held significantly more than 20% due to locked in gains and didn't want to sell for tax reasons. International has done well recently so you should be even more locked in.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: I own no international stocks. Can you guess why?

Post by JW-Retired » Sun Aug 20, 2017 11:22 am

Taylor Larimore wrote:
Sun Aug 20, 2017 10:43 am
Bogleheads:
I have gradually reduced my international allocation to 00% . Can you guess why?
My guess: You have been keeping your capital gains taxes lower by selling only international. International stocks have less gains the last 10-15 years.
JW
Last edited by JW-Retired on Sun Aug 20, 2017 11:27 am, edited 1 time in total.
Retired at Last

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Re: I own no international stocks. Can you guess why?

Post by retiredjg » Sun Aug 20, 2017 11:25 am

Taylor Larimore wrote:
Sun Aug 20, 2017 10:43 am
Can you guess why?
They were all in one IRA and as you drained that IRA, you decided the international stocks just were not worth the trouble to replace, especially since Jack Bogle says they are not needed at all.

Second guess....you no longer own any stocks. :D

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Re: I own no international stocks. Can you guess why?

Post by Dottie57 » Sun Aug 20, 2017 11:28 am

You've given it away to family.

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nedsaid
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Re: I own no international stocks. Can you guess why?

Post by nedsaid » Sun Aug 20, 2017 11:29 am

bilperk wrote:
Sun Aug 20, 2017 11:17 am
nedsaid wrote:
Sun Aug 20, 2017 10:56 am
Taylor, my guess is good old recency bias. US Stocks have done so well in recent years that some Bogleheads believe there is no need for International. I believe this to be a mistake. I was just posting in another thread about the 1989 Japanese bubble and the subsequent burst. In 1989, Japanese investors could crow about their big multi-national companies that were the envy of the world, the number two economy in the world soon to overtake the US, and a stock market that performed so well that there was no need to invest anywhere else. Why would a Japanese investor own US Stocks when Japanese companies did so much business in the US? Why would Japanese investors take currency risk?

As much as I like and respect John Bogle, I just think he is plain old wrong. It is a mistake to have all your investments in one country, even your own.
Mr. Bogle has not been wrong. The long term returns of asset classes, large, value, small, ... have be almost exactly the same, just as he said they likely would. And just like he said rebalancing wouldn't make much difference in return, it hasn't.

https://seekingalpha.com/article/404186 ... urn-stocks
I did a study of my own investment returns using Quicken to calculate my own returns and using Portfolio Visualizer to calculate the returns of a Three Fund portfolio. At least during that time period, rebalancing annually would have boosted my returns by 0.36% a year. My take is that the rebalancing bonus is time period dependent, sometimes you get it and sometimes you don't. I should have rebalanced from bonds to stocks during the 2008-2009 bear market but I was too scared and did not.

As far as International, 10 years ago, the stuff I was reading said that International performed better than the US and that adding International Stocks to a portfolio would boost returns and decrease volatility. How much things changed with the 2008-2009 financial crisis and the flight to quality in the United States. Hence returns for International Stocks since then have been disappointing. A strong US Dollar since the financial crisis has been a big factor too.

Bogle will be right as long as the United States retains its unique competitive position in the world. One of them is the reserve currency status of the US Dollar. Another advantage is the transparency of the US Markets. Another advantage is economic freedom. Another advantage is relative political stability. Nothing lasts forever. I believe it prudent to look beyond our own borders, if for no other reason that many of the finest companies in the world are headquartered outside of our borders.
A fool and his money are good for business.

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Re: I own no international stocks. Can you guess why?

Post by moshe » Sun Aug 20, 2017 11:38 am

Hi Taylor,

You hit your number and decided to go to cash /T Bills / Notes?

You went to cash and spent it all on eclipse sunglasses?!?

You just won Powerball and well.. Margaritaville baby! :beer

~Moshe
My money has no emotions. ~Moshe | | I'm the world's greatest expert on my own opinion. ~Bruce Williams

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Re: I own no international stocks. Can you guess why?

Post by jebmke » Sun Aug 20, 2017 11:39 am

You hate filling out Form 1116 :P
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: I own no international stocks. Can you guess why?

Post by Nate79 » Sun Aug 20, 2017 11:41 am

Because you are an active investor and are making a country bet on the US? :D

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Re: I own no international stocks. Can you guess why?

Post by friar1610 » Sun Aug 20, 2017 11:42 am

You made a gift in-kind to a charity (gave the charity appreciated shares) thereby eliminating any capital gains concerns.
Friar1610

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Re: I own no international stocks. Can you guess why?

Post by ruralavalon » Sun Aug 20, 2017 11:52 am

Just a guess -- perhaps to simplify the portfolio down to one fund, to something like Vanguard Balanced Index Fund?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: I own no international stocks. Can you guess why?

Post by WolfpackFan » Sun Aug 20, 2017 11:58 am

So much for "stay the course"

staythecourse
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Re: I own no international stocks. Can you guess why?

Post by staythecourse » Sun Aug 20, 2017 12:01 pm

The shocker of the day... Taylor doesn't like international. :D

Taylor 2 questions:
1. When did you own 30% foreign equity? Just curious, if it some recency bias going on and you were 30% after it looked like Japan was going to run the world in the mid 80's.
2. Are you a proponent of U.S only investing OR home country investing? The difference matters for our non U.S. readers on this forum. If you were born Mr. Yasuhara would you have been advocating 100% Japan this whole time (home country bias) or 100% U.S. (your were just guessing that it would be an economic superpower since post WWII)?

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: I own no international stocks. Can you guess why?

Post by harvestbook » Sun Aug 20, 2017 12:05 pm

Because the three-fund portfolio thread was too long?
I'm not smart enough to know, and I can't afford to guess.

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Re: I own no international stocks. Can you guess why?

Post by jebmke » Sun Aug 20, 2017 12:08 pm

You're running for President and have divested everything.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: I own no international stocks. Can you guess why?

Post by Dude2 » Sun Aug 20, 2017 12:15 pm

The Wizard wrote:
Sun Aug 20, 2017 11:16 am
Guess #2: due to following a modified age in bonds formula, you now own no stocks at all! 100% bonds!
Age + 7 in bonds.

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Re: I own no international stocks. Can you guess why?

Post by The Wizard » Sun Aug 20, 2017 12:21 pm

moshe wrote:
Sun Aug 20, 2017 11:38 am
Hi Taylor,

You hit your number and decided to go to cash /T Bills / Notes?
Funny, this one.
Yes, after 7 decades of slaving away 40+ hours per week, Taylor FINALLY hit his number at age 93, a sufficiently good number to fund 40 years of retirement no matter WHAT happens...
Attempted new signature...

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Re: I own no international stocks. Can you guess why?

Post by Leif » Sun Aug 20, 2017 12:21 pm

You sacrificed diversification for simplicity? How does that jive with your quote in my signature? Did you go all cash? Market timing? Say it ain't so!
Last edited by Leif on Sun Aug 20, 2017 12:31 pm, edited 3 times in total.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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Re: I own no international stocks. Can you guess why?

Post by texaspapas » Sun Aug 20, 2017 12:28 pm

Beyond the standard reasons for/against international holdings, isn't there a tax efficiency benefit to having some international allocation in taxable accounts that many people don't consider in the regular reasons for/against?

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Re: I own no international stocks. Can you guess why?

Post by rob » Sun Aug 20, 2017 12:31 pm

Because you just wanted to lob that comment into the forum like raw meat in the tiger cage :D
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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Re: I own no international stocks. Can you guess why?

Post by EddyB » Sun Aug 20, 2017 12:44 pm

Will this be actionable?

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Re: I own no international stocks. Can you guess why?

Post by EnjoyIt » Sun Aug 20, 2017 12:48 pm

Plenty of reasonable guesses above. I'm posting just to follow.

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Re: I own no international stocks. Can you guess why?

Post by stan1 » Sun Aug 20, 2017 12:51 pm

My father in law is a Battle of the Bulge veteran (he was an enlisted MP) who went on to be a chief engineer at a Fortune 500 company (with no college degree). He hasn't left the US since he returned home from Europe in 1945. His former employer of 40+ years is still around but is now a multinational corporation with manufacturing and sales around the world. The manufacturing plant my FIL worked at for his entire career is long closed and the city they live in has a different economy that's heavily reliant on medical care for its aging residents and low wage retail. He did break down and buy a Honda in the 1990s and a Lexus in the 2000s.

We are 30 years younger. Our nieces and nephews are 60 years younger and their kids are 90 years younger. International investing was not a consideration during most of my father in laws life. I'm curious what Taylor's answer will be but I'm guessing it will be something based on his life experience that might not be the same for someone 30, 60, or 90 years younger. Rationalizations can cloak our deeply held beliefs and I would not rely on an emotional response such as American exceptionalism going forward. My father in law probably has never heard the term American exceptionalism is but I can guarantee he's a product of it.

Personally the whole reason I invest passively is to avoid these emotional pulls.

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Re: I own no international stocks. Can you guess why?

Post by RadAudit » Sun Aug 20, 2017 12:55 pm

I don't have a clue - but I'm looking forward to the explanation and the opportunity to see if the rational makes sense for my situation. (I'm sure it makes sense for your situation or else you wouldn't of done it.)
FI is the best revenge. LBYM. Invest the rest. Stay the course.

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Re: I own no international stocks. Can you guess why?

Post by chevca » Sun Aug 20, 2017 1:01 pm

rob wrote:
Sun Aug 20, 2017 12:31 pm
Because you just wanted to lob that comment into the forum like raw meat in the tiger cage :D
This ^^

Because Taylor is old enough and doing well enough not to care about holding international, and it's fun for him to irk the majority of the Bogleheads. :D

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Re: I own no international stocks. Can you guess why?

Post by thangngo » Sun Aug 20, 2017 1:20 pm

Taylor Larimore wrote:
Sun Aug 20, 2017 10:43 am
Bogleheads:

How much international stock should we own is a much discussed subject. Hoping to help, a year ago I made a post suggesting 20% of equity.

I once allocated over 30% of my equity in international stocks. I have gradually reduced my international allocation to 00% . Can you guess why?

I'll answer tomorrow.

Best wishes.
Taylor
Cliff hanger? :sharebeer

A friend of mine boasted that he got rich because he keeps buying Apple stock. He asked me why don't buy Apple stock like he does. He scoffed at the idea of buying the entire market, saying that it's not smart to buy losing stocks.

I told him that I'm not smart enough to pick a winning stock. I buy the entire market so that I don't have to worry about picking winning stock.

Similarly, I'm not smart enough to know where U.S. markets and global economies are going. I have 30% allocated to ex-US market, just because I don't have to worry about ups and downs of the global market.

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Re: I own no international stocks. Can you guess why?

Post by eRob » Sun Aug 20, 2017 1:25 pm

You now own only one fund? A Vanguard balanced fund

CppCoder
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Re: I own no international stocks. Can you guess why?

Post by CppCoder » Sun Aug 20, 2017 1:34 pm

You pressed the wrong button on Vanguard's website but felt you could never tell us this real reason. So, you created this thread to be able to pick the best reason from all of the replies. Then, tomorrow, you'll say, "Yep, so and so nailed it," as you breathe in deeply, smile, and relax now having a great reason for your action :D.

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Re: I own no international stocks. Can you guess why?

Post by bilperk » Sun Aug 20, 2017 2:11 pm

nedsaid wrote:
Sun Aug 20, 2017 11:29 am
bilperk wrote:
Sun Aug 20, 2017 11:17 am
nedsaid wrote:
Sun Aug 20, 2017 10:56 am
Taylor, my guess is good old recency bias. US Stocks have done so well in recent years that some Bogleheads believe there is no need for International. I believe this to be a mistake. I was just posting in another thread about the 1989 Japanese bubble and the subsequent burst. In 1989, Japanese investors could crow about their big multi-national companies that were the envy of the world, the number two economy in the world soon to overtake the US, and a stock market that performed so well that there was no need to invest anywhere else. Why would a Japanese investor own US Stocks when Japanese companies did so much business in the US? Why would Japanese investors take currency risk?

As much as I like and respect John Bogle, I just think he is plain old wrong. It is a mistake to have all your investments in one country, even your own.
Mr. Bogle has not been wrong. The long term returns of asset classes, large, value, small, ... have be almost exactly the same, just as he said they likely would. And just like he said rebalancing wouldn't make much difference in return, it hasn't.

https://seekingalpha.com/article/404186 ... urn-stocks
I did a study of my own investment returns using Quicken to calculate my own returns and using Portfolio Visualizer to calculate the returns of a Three Fund portfolio. At least during that time period, rebalancing annually would have boosted my returns by 0.36% a year. My take is that the rebalancing bonus is time period dependent, sometimes you get it and sometimes you don't. I should have rebalanced from bonds to stocks during the 2008-2009 bear market but I was too scared and did not.

As far as International, 10 years ago, the stuff I was reading said that International performed better than the US and that adding International Stocks to a portfolio would boost returns and decrease volatility. How much things changed with the 2008-2009 financial crisis and the flight to quality in the United States. Hence returns for International Stocks since then have been disappointing. A strong US Dollar since the financial crisis has been a big factor too.

Bogle will be right as long as the United States retains its unique competitive position in the world. One of them is the reserve currency status of the US Dollar. Another advantage is the transparency of the US Markets. Another advantage is economic freedom. Another advantage is relative political stability. Nothing lasts forever. I believe it prudent to look beyond our own borders, if for no other reason that many of the finest companies in the world are headquartered outside of our borders.
It is all time period dependent. That is Mr. Bogle's point. Over time, international and US should be about even. Over shorter periods, one will usually do better than the other. The trick is, knowing which will be better when. Since we don't know in advance, you are just as well off holding or not holding international from a strategic standpoint. Don't confuse outcome with strategy, particularly over short periods. The same holds true for rebalancing.
Bill

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SimpleGift
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Re: I own no international stocks. Can you guess why?

Post by SimpleGift » Sun Aug 20, 2017 2:15 pm

AlohaJoe wrote:
Sun Aug 20, 2017 11:12 am
Because you retired in the single best year to retire in 180 years of US stock market history and it would have allowed you withdraw over 8% inflation adjusted and still be fine, so your asset allocation and withdrawal strategy didn't matter?
+ 1 :thumbsup
Cordially, Todd

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Re: I own no international stocks. Can you guess why?

Post by Mr.BB » Sun Aug 20, 2017 2:18 pm

Because you feel your U.S. equity positions have a large enough overseas influence that you don't need to specifically own any foreign holdings?
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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Re: I own no international stocks. Can you guess why?

Post by KESP » Sun Aug 20, 2017 2:36 pm

I don't have any idea, but it has to be for a simple reason since Taylor is all about simplicity. I've always loved his posts that make me feel I can actually do this investing stuff on my own. :happy

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