"Using Jack Bogle's own words against him when it comes to international investing"

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Taylor Larimore
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"Using Jack Bogle's own words against him when it comes to international investing"

Post by Taylor Larimore » Wed Oct 18, 2017 4:08 pm

Bogleheads:

CNBC has written an article about Mr. Bogle's thoughts during a private meeting at a Morningstar Investment Conference. This is the link:

Using Jack Bogle's own words against him when it comes to international investing

Best wishes.
Taylor
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by Majormajor78 » Wed Oct 18, 2017 5:14 pm

Throwing his own words in his face makes a good headline even if it isn't strictly true.
Overseas investments - holdings in the corporations of other nations - are not essential, nor even necessary, to a well-diversified portfolio. For investors who disagree - and there are some valid reasons for global investing - I would recommend limiting international investments to a maximum of 20 percent of a global equity portfolio.
From common sense on mutual funds, first published 18 years ago. Certainly US centric but hardly the dogmatic anti-international position the article would portray him as having.
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by nisiprius » Wed Oct 18, 2017 5:49 pm

Majormajor78 wrote:
Wed Oct 18, 2017 5:14 pm
...
Overseas investments - holdings in the corporations of other nations - are not essential, nor even necessary, to a well-diversified portfolio. For investors who disagree - and there are some valid reasons for global investing - I would recommend limiting international investments to a maximum of 20 percent of a global equity portfolio.
From common sense on mutual funds, first published 18 years ago. Certainly US centric but hardly the dogmatic anti-international position the article would portray him as having.../quote]
And to the best of my recollection he has been very consistent in taking that non-dogmatic position.

There's other stupid stuff in the article:
There is a lot more to invest in now than just the EAFE, which was a primary part of Bogle's criticism: "The three largest countries in the international index [EAFE] are Great Britain, Japan and France, and to bet those countries will do better than the U.S. in the long run is a bad bet." That's still true today. Those three countries still comprise a little over half of the overseas developed markets index. But Bogle's argument didn't take into account the rise of emerging markets.
Yeah, great. So if you include emerging markets, the three largest countries in the international index are... Japan, Great Britain, and Canada. With France as #4.

So what's the difference between investing in EAFE (I'll use the EFA ETF to represent that), orange, and VTIAX, which includes emerging markets, Canada, and everything but the U.S.?

Yes, emerging markets added a boost worth having if you were holding it over the rather specific time period 2005-2009. Still, the general behavior is fairly similar and I don't think the addition of emerging markets amounts to a difference in kind; international is international. (If you restrict the chart to the last ten years, by the way, there's very little difference).

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by Sandtrap » Wed Oct 18, 2017 7:04 pm

Taylor Larimore wrote:
Wed Oct 18, 2017 4:08 pm
Bogleheads:

CNBC has written an article about Mr. Bogle's thoughts during a private meeting at a Morningstar Investment Conference. This is the link:

Using Jack Bogle's own words against him when it comes to international investing

Best wishes.
Taylor
This article seems to have a lot of alternating spin from various sources that distracts from Mr. Bogle's thoughts. IMHO the title itself churns news.
I don't know if it's just simple minded me or my need for simplicity, but in general the Boglehead's threads on adding International for diversification is a lot clearer and more substantive. IE: "nisiprius"
Thanks for posting interesting reading, "Taylor".
j :D

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by nedsaid » Wed Oct 18, 2017 7:37 pm

It is not irrational to be a US only investor. So far, this has worked out well for investors.

As a matter of philosophy and prudence, I choose to invest outside the borders of the United States. The thing is, my bark is worse than my bite as 28% of my stocks and 7% of my bonds are International. So even I primarily invest in the United States.

John Bogle's philosophy regarding investing has been remarkably consistent over the years. He is not doctrinaire though, and he says all kinds of surprising things. He has done all kinds of surprising things though he mostly follows his stated investment philosophy. The guy is human. We should give him credit for thinking outside even his own box and for thinking aloud during interviews. It is refreshing to hear somebody speak his mind.

Bogle suggests that stock investors limit their International investments to 20% of a stock portfolio. The US/International Stock efficient frontiers that I have seen show little difference between 20% and 50% International. As I recall, the sweet spot seems to be about 30%. Vanguard now recommends 40%. So Mr. Bogle has not been wrong.
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by Sandtrap » Wed Oct 18, 2017 8:03 pm

nedsaid wrote:
Wed Oct 18, 2017 7:37 pm
It is not irrational to be a US only investor. So far, this has worked out well for investors.

As a matter of philosophy and prudence, I choose to invest outside the borders of the United States. The thing is, my bark is worse than my bite as 28% of my stocks and 7% of my bonds are International. So even I primarily invest in the United States.

John Bogle's philosophy regarding investing has been remarkably consistent over the years. He is not doctrinaire though, and he says all kinds of surprising things. He has done all kinds of surprising things though he mostly follows his stated investment philosophy. The guy is human. We should give him credit for thinking outside even his own box and for thinking aloud during interviews. It is refreshing to hear somebody speak his mind.

Bogle suggests that stock investors limit their International investments to 20% of a stock portfolio. The US/International Stock efficient frontiers that I have seen show little difference between 20% and 50% International. As I recall, the sweet spot seems to be about 30%. Vanguard now recommends 40%. So Mr. Bogle has not been wrong.
This is more in the tact of Mr. Bogle's earlier books IE: US companies are already vested internationally.
But I'd like to understand it as it applies to this article:
onward:
I know this has been discussed in a zillion other threads. . . .but if one is 90% invested in Total Stock, aren't the major corporations already globally invested (international) to various degrees. Thus, if one adds "International" to "X" %, isn't it actually greater than "X" % and that increase is difficult to nail down because it's difficult to quanitfy to what degree US companies are globally invested?

If this is so. Then if one is 20% allocated internationally and also has Total Bond, Index 500, etc, then it's actually a larger than 20% allocation. True?

Please clarify if possible?

Tough for me to ask so sorry for the convolution.
Thanks, "nedsaid"
j

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by arcticpineapplecorp. » Wed Oct 18, 2017 8:18 pm

Sandtrap wrote:
Wed Oct 18, 2017 8:03 pm
nedsaid wrote:
Wed Oct 18, 2017 7:37 pm
It is not irrational to be a US only investor. So far, this has worked out well for investors.

As a matter of philosophy and prudence, I choose to invest outside the borders of the United States. The thing is, my bark is worse than my bite as 28% of my stocks and 7% of my bonds are International. So even I primarily invest in the United States.

John Bogle's philosophy regarding investing has been remarkably consistent over the years. He is not doctrinaire though, and he says all kinds of surprising things. He has done all kinds of surprising things though he mostly follows his stated investment philosophy. The guy is human. We should give him credit for thinking outside even his own box and for thinking aloud during interviews. It is refreshing to hear somebody speak his mind.

Bogle suggests that stock investors limit their International investments to 20% of a stock portfolio. The US/International Stock efficient frontiers that I have seen show little difference between 20% and 50% International. As I recall, the sweet spot seems to be about 30%. Vanguard now recommends 40%. So Mr. Bogle has not been wrong.
This is more in the tact of Mr. Bogle's earlier books IE: US companies are already vested internationally.
But I'd like to understand it as it applies to this article:
onward:
I know this has been discussed in a zillion other threads. . . .but if one is 90% invested in Total Stock, aren't the major corporations already globally invested (international) to various degrees. Thus, if one adds "International" to "X" %, isn't it actually greater than "X" % and that increase is difficult to nail down because it's difficult to quanitfy to what degree US companies are globally invested?

If this is so. Then if one is 20% allocated internationally and also has Total Bond, Index 500, etc, then it's actually a larger than 20% allocation. True?

Please clarify if possible?

Tough for me to ask so sorry for the convolution.
Thanks, "nedsaid"
j
I think what you're saying is if U.S. companies get 50% of their revenues from overseas AND you also hold international at say 20%...then don't you really have MORE than 20% international because of the overseas revenue of U.S. companies?

But if you have international companies and a portion of THEIR revenues are derived from overseas (i.e., the U.S.) then doesn't the one cancel the other out to a certain degree? In other words, while Apple may sell products outside the U.S., don't U.S. consumers buy Samsung? While GM sells more cars in China (than in the U.S., source: https://www.google.com/search?q=where+d ... 8&oe=utf-8), Toyota sells the most cars to U.S. consumers (source: https://www.google.com/search?q=what+ca ... 8&oe=utf-8). And yes, I know Toyota is a Japanese company, not Chinese.

It's an interesting question, though.
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by Sandtrap » Wed Oct 18, 2017 8:25 pm

arcticpineapplecorp. wrote:
Wed Oct 18, 2017 8:18 pm
Sandtrap wrote:
Wed Oct 18, 2017 8:03 pm
nedsaid wrote:
Wed Oct 18, 2017 7:37 pm
It is not irrational to be a US only investor. So far, this has worked out well for investors.

As a matter of philosophy and prudence, I choose to invest outside the borders of the United States. The thing is, my bark is worse than my bite as 28% of my stocks and 7% of my bonds are International. So even I primarily invest in the United States.

John Bogle's philosophy regarding investing has been remarkably consistent over the years. He is not doctrinaire though, and he says all kinds of surprising things. He has done all kinds of surprising things though he mostly follows his stated investment philosophy. The guy is human. We should give him credit for thinking outside even his own box and for thinking aloud during interviews. It is refreshing to hear somebody speak his mind.

Bogle suggests that stock investors limit their International investments to 20% of a stock portfolio. The US/International Stock efficient frontiers that I have seen show little difference between 20% and 50% International. As I recall, the sweet spot seems to be about 30%. Vanguard now recommends 40%. So Mr. Bogle has not been wrong.
This is more in the tact of Mr. Bogle's earlier books IE: US companies are already vested internationally.
But I'd like to understand it as it applies to this article:
onward:
I know this has been discussed in a zillion other threads. . . .but if one is 90% invested in Total Stock, aren't the major corporations already globally invested (international) to various degrees. Thus, if one adds "International" to "X" %, isn't it actually greater than "X" % and that increase is difficult to nail down because it's difficult to quanitfy to what degree US companies are globally invested?

If this is so. Then if one is 20% allocated internationally and also has Total Bond, Index 500, etc, then it's actually a larger than 20% allocation. True?

Please clarify if possible?

Tough for me to ask so sorry for the convolution.
Thanks, "nedsaid"
j
I think what you're saying is if U.S. companies get 50% of their revenues from overseas AND you also hold international at say 20%...then don't you really have MORE than 20% international because of the overseas revenue of U.S. companies?

But if you have international companies and a portion of THEIR revenues are derived from overseas (i.e., the U.S.) then doesn't the one cancel the other out to a certain degree? In other words, while Apple may sell products outside the U.S., don't U.S. consumers buy Samsung? While GM sells more cars in China, Toyota sells the most cars to U.S. consumers (source: https://www.google.com/search?q=what+ca ... 8&oe=utf-8). And yes, I know Toyota is a Japanese company, not Chinese. Unfortunately, it was the only anology I could find for best selling cars in U.S. vs. ex-U.S.

It's an interesting question, though.
Thanks, "arctic . . "
That's exactly what I was muddling to say. And, as the market grows outside of the USA, so will the USA companies increase internationally. So it's a self balancing "allocation within itself to some degree. Threads discuss USA falling vs international rising, but to some degree if USA companies fall, they take international along with them.
IE: The Toyota Tundra has the highest percentage of American made parts. Certain USA labelled cars have the highest percentage of overseas parts. Like that.
So if one is allocated, IE: 20% international. . it's actually far greater if he also has significant allocations to USA funds.
Thanks again,
j

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by acanthurus » Wed Oct 18, 2017 10:42 pm

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by abuss368 » Wed Oct 18, 2017 11:35 pm

Thank you Taylor!
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by Portfolio7 » Wed Oct 18, 2017 11:55 pm

acanthurus wrote:
Wed Oct 18, 2017 10:42 pm
Bogle is so sharp and nuanced and thoughtful in his public comments that I doubt anyone could find something that seriously contradicted his own words. The times he's strayed from his own advice he's been very open about. His followers contradict him infinitely more often :)
+1

I trust very few writers to provide any kind of insight into Bogle's thoughts. Folks like Zweig, Clement or maybe Jaffe have a clue, but most of the rest are just cutting their teeth with these articles - they are a long ways from being able to provide useful counterpoints. They'd do better just reprinting what he said and asking some of the better known finance writers to provide color.
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by Sandtrap » Wed Oct 18, 2017 11:57 pm

Portfolio7 wrote:
Wed Oct 18, 2017 11:55 pm
acanthurus wrote:
Wed Oct 18, 2017 10:42 pm
Bogle is so sharp and nuanced and thoughtful in his public comments that I doubt anyone could find something that seriously contradicted his own words. The times he's strayed from his own advice he's been very open about. His followers contradict him infinitely more often :)
+1

I trust very few writers to provide any kind of insight into Bogle's thoughts. Folks like Clement or maybe Jaffe have a clue, but most of the rest are just gaining cutting their teeth with these articles - they are a long ways from being able to provide useful counterpoints. They'd do better just reprinting what he said and asking some of the better known finance writers to provide color.
++++1

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by nedsaid » Thu Oct 19, 2017 8:43 am

Sandtrap wrote:
Wed Oct 18, 2017 8:03 pm
nedsaid wrote:
Wed Oct 18, 2017 7:37 pm
It is not irrational to be a US only investor. So far, this has worked out well for investors.

As a matter of philosophy and prudence, I choose to invest outside the borders of the United States. The thing is, my bark is worse than my bite as 28% of my stocks and 7% of my bonds are International. So even I primarily invest in the United States.

John Bogle's philosophy regarding investing has been remarkably consistent over the years. He is not doctrinaire though, and he says all kinds of surprising things. He has done all kinds of surprising things though he mostly follows his stated investment philosophy. The guy is human. We should give him credit for thinking outside even his own box and for thinking aloud during interviews. It is refreshing to hear somebody speak his mind.

Bogle suggests that stock investors limit their International investments to 20% of a stock portfolio. The US/International Stock efficient frontiers that I have seen show little difference between 20% and 50% International. As I recall, the sweet spot seems to be about 30%. Vanguard now recommends 40%. So Mr. Bogle has not been wrong.
This is more in the tact of Mr. Bogle's earlier books IE: US companies are already vested internationally.

Nedsaid: You could turn the argument on its head as big Foreign companies do a lot of U.S. business. Some that I can think of are Siemens, Toyota, Nissan, Royal Dutch Shell, Samsung, Hyundai, Nestle, Daimler.

But I'd like to understand it as it applies to this article:
onward:
I know this has been discussed in a zillion other threads. . . .but if one is 90% invested in Total Stock, aren't the major corporations already globally invested (international) to various degrees. Thus, if one adds "International" to "X" %, isn't it actually greater than "X" % and that increase is difficult to nail down because it's difficult to quanitfy to what degree US companies are globally invested?

If this is so. Then if one is 20% allocated internationally and also has Total Bond, Index 500, etc, then it's actually a larger than 20% allocation. True?

Nedsaid: I recall that the S&P 500 companies derive half or more of their revenues from overseas. But do you add to US allocation the proportion of US business done by foreign companies? So I think you can see my point. Bogle makes a valid point but I wouldn't get too hung up on it. We have multinational companies here in the United States but such companies are also based in countries all over the world.

Please clarify if possible?

Nedsaid: I think another argument for diversification is that you get better diversification across industry sectors. For example, the broad US Stock Indexes are pretty tech heavy. Canada's stock market is concentrated in four sectors. Stuff like that. I want to own the best companies in the world regardless of where they are headquartered and I want representation in industry sectors that are underrepresented here in the United States.

Tough for me to ask so sorry for the convolution.
Thanks, "nedsaid"
j
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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by TD2626 » Thu Oct 19, 2017 10:17 am

I sortof feel sorry for people for whom every single word they say is latched onto by article after article. Everyone's probably said some contradictory things at some points in their lives - but for people for whom every word is recorded by the headlines, there can be consequences to those contradictions. Living under a microscope like that either means that someone can't "think out loud" (which has substantial benefits) or does think out loud and gets ridiculed. Besides, quotes get magnified, taken out of context, and misinterpreted all the time in clickbait headlines. So what if someone, a long time ago, said two plus two equals five? Does that mean that they still believe in that, or that they truly can't add? Or were they trying to make a different point entirely? It's all too easy to take things out of context.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by columbia » Thu Oct 19, 2017 3:11 pm

nisiprius wrote:
Wed Oct 18, 2017 5:49 pm
Majormajor78 wrote:
Wed Oct 18, 2017 5:14 pm
...
Overseas investments - holdings in the corporations of other nations - are not essential, nor even necessary, to a well-diversified portfolio. For investors who disagree - and there are some valid reasons for global investing - I would recommend limiting international investments to a maximum of 20 percent of a global equity portfolio.
From common sense on mutual funds, first published 18 years ago. Certainly US centric but hardly the dogmatic anti-international position the article would portray him as having.../quote]
And to the best of my recollection he has been very consistent in taking that non-dogmatic position.

There's other stupid stuff in the article:
There is a lot more to invest in now than just the EAFE, which was a primary part of Bogle's criticism: "The three largest countries in the international index [EAFE] are Great Britain, Japan and France, and to bet those countries will do better than the U.S. in the long run is a bad bet." That's still true today. Those three countries still comprise a little over half of the overseas developed markets index. But Bogle's argument didn't take into account the rise of emerging markets.
Yeah, great. So if you include emerging markets, the three largest countries in the international index are... Japan, Great Britain, and Canada. With France as #4.

So what's the difference between investing in EAFE (I'll use the EFA ETF to represent that), orange, and VTIAX, which includes emerging markets, Canada, and everything but the U.S.?

Yes, emerging markets added a boost worth having if you were holding it over the rather specific time period 2005-2009. Still, the general behavior is fairly similar and I don't think the addition of emerging markets amounts to a difference in kind; international is international. (If you restrict the chart to the last ten years, by the way, there's very little difference).

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This probably the best post I've read here for not bothering with DM and/or EM.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by triceratop » Thu Oct 19, 2017 3:20 pm

acanthurus wrote:
Wed Oct 18, 2017 10:42 pm
Bogle is so sharp and nuanced and thoughtful in his public comments that I doubt anyone could find something that seriously contradicted his own words. The times he's strayed from his own advice he's been very open about. His followers contradict him infinitely more often :)
Ok, I'll bite.
Jack Bogle wrote:Forget the needle, buy the haystack.
Jack Bogle wrote:The three largest countries in the international index [EAFE] are Great Britain, Japan and France, and to bet those countries will do better than the U.S. in the long run is a bad bet.
That wasn't even hard.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by saltycaper » Thu Oct 19, 2017 3:57 pm

TD2626 wrote:
Thu Oct 19, 2017 10:17 am

So what if someone, a long time ago, said two plus two equals five? Does that mean that they still believe in that, or that they truly can't add? Or were they trying to make a different point entirely? It's all too easy to take things out of context.
In this case, things are not being taken out of context, and it is not some one-off remark or thinking-out-loud comment that just got repeated for click-bait headlines. Bogle's asserted his opinion on ex-US stocks repeatedly. He's not shied away from sharing his opinions, and he's profited handsomely from his work, so I wouldn't feel too bad about it.

2+2=5 is wrong, of course, and that's a problem, but his contradiction in this instance is worse than being wrong, IMO. To maintain the analogy, it's as if he himself went to great lengths to prove 2+2=4 and spent considerable time and energy spreading the word, only to say subsequently that, in one particular case, he's going to forget all his previous findings and advice and is just going to say it's 5.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by acanthurus » Thu Oct 19, 2017 4:07 pm

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by triceratop » Thu Oct 19, 2017 4:53 pm

acanthurus wrote:
Thu Oct 19, 2017 4:07 pm
triceratop wrote:
Thu Oct 19, 2017 3:20 pm
acanthurus wrote:
Wed Oct 18, 2017 10:42 pm
Bogle is so sharp and nuanced and thoughtful in his public comments that I doubt anyone could find something that seriously contradicted his own words. The times he's strayed from his own advice he's been very open about. His followers contradict him infinitely more often :)
Ok, I'll bite.
Jack Bogle wrote:Forget the needle, buy the haystack.
Jack Bogle wrote:The three largest countries in the international index [EAFE] are Great Britain, Japan and France, and to bet those countries will do better than the U.S. in the long run is a bad bet.
That wasn't even hard.
I'll play. Where does the first quote come from, and what was he addressing?
At 2:15 here: http://www.investmentnews.com/section/v ... e=20130315

Argues to own the whole market, because the market risk and the market return is quite enough.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by acanthurus » Thu Oct 19, 2017 9:29 pm

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by triceratop » Thu Oct 19, 2017 10:58 pm

Yes I chose a source that was more convenient for the point I was making rather than the point you were making. My source backs my point, so I don't quite see the relevance of your other source.

Anyway, the claim was no one could find an instance of his contradicting himself -- and that I was able to do. Now, you can argue that makes me have a small mind, but that's a separate question.

Even on the face of it though, the statements are clearly contradictory.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by nedsaid » Fri Oct 20, 2017 11:01 am

TD2626 wrote:
Thu Oct 19, 2017 10:17 am
I sortof feel sorry for people for whom every single word they say is latched onto by article after article. Everyone's probably said some contradictory things at some points in their lives - but for people for whom every word is recorded by the headlines, there can be consequences to those contradictions. Living under a microscope like that either means that someone can't "think out loud" (which has substantial benefits) or does think out loud and gets ridiculed. Besides, quotes get magnified, taken out of context, and misinterpreted all the time in clickbait headlines. So what if someone, a long time ago, said two plus two equals five? Does that mean that they still believe in that, or that they truly can't add? Or were they trying to make a different point entirely? It's all too easy to take things out of context.
Great post. I have been saying much the same here. Sometimes I think that if John Bogle himself would take up an anonymous avatar and post here that he would be pilloried for not being Bogleheaded enough. He would be accused of contradicting himself, practicing market timing, advocating aggressive portfolios for retirees, flip-flopping, not rebalancing his portfolio enough, playing with active funds, owning an individual stock, etc., etc., etc.

When you look at Mr. Bogle and his career from 40,000 feet, you find a man who has been remarkably consistent during his career. He has overwhelmingly done what he advocates for others. Yes, he took a pseudonym and wrote an article defending active management. Yes, he signaled he was going to drastically reduce his stocks during the late 1990's though he in actual practice reduced his stocks in a slow and modest fashion. Yes, he presided over the disaster of Wellington management. Yes, he owns stock in T. Rowe Price. Yes, he invests in his son's quant fund. Yes, he has advocated strategic asset allocation when valuations get to extremes. The thing is, these were outliers, he mostly invests the way he tells us to invest and his philosophy has been remarkably consistent over time.

You have to give the guy credit for having the courage to try new things. As I said before, he has the courage to think outside his own box. He says rather surprising things from time to time. It shows that he thinks for himself and will speak his mind. His internal compass has guided him well and he always returns to his bedrock principles.
A fool and his money are good for business.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by chevca » Fri Oct 20, 2017 11:20 am

triceratop wrote:
Thu Oct 19, 2017 10:58 pm
Yes I chose a source that was more convenient for the point I was making rather than the point you were making. My source backs my point, so I don't quite see the relevance of your other source.

Anyway, the claim was no one could find an instance of his contradicting himself -- and that I was able to do. Now, you can argue that makes me have a small mind, but that's a separate question.

Even on the face of it though, the statements are clearly contradictory.
I don't see them as "clearly contradictory". I suppose it's all in how one interprets "the haystack". You obviously feel that means to own international as part of the market. Others might take it to mean simply use index funds rather than active funds or individual stocks.

Did your source back you point by Mr. Bogle explaining the haystack to include international? If not, I don't think you have made a very good point.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by triceratop » Fri Oct 20, 2017 11:43 am

chevca wrote:
Fri Oct 20, 2017 11:20 am
triceratop wrote:
Thu Oct 19, 2017 10:58 pm
Yes I chose a source that was more convenient for the point I was making rather than the point you were making. My source backs my point, so I don't quite see the relevance of your other source.

Anyway, the claim was no one could find an instance of his contradicting himself -- and that I was able to do. Now, you can argue that makes me have a small mind, but that's a separate question.

Even on the face of it though, the statements are clearly contradictory.
I don't see them as "clearly contradictory". I suppose it's all in how one interprets "the haystack". You obviously feel that means to own international as part of the market. Others might take it to mean simply use index funds rather than active funds or individual stocks.

Did your source back you point by Mr. Bogle explaining the haystack to include international? If not, I don't think you have made a very good point.
You misunderstand. The entire point is to remove emotions and how one feels from the picture. Objectively, international equities are part of the "haystack" of equities. This cannot be debated. It's not a matter of interpretation. I buy Samsung, nestle, ford, and Gazprom products (presumably). These companies are public. It makes zero difference where they are domiciled that thy are considered equities.

My source doesn't need to show Bogle considering international as part of the haystack. Since that's a fact and he's clearly picking needles, I've shown all I need to.

Or are you saying international equities aren't equities in the same way US equities are?!
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by chevca » Fri Oct 20, 2017 11:57 am

triceratop wrote:
Fri Oct 20, 2017 11:43 am
chevca wrote:
Fri Oct 20, 2017 11:20 am
triceratop wrote:
Thu Oct 19, 2017 10:58 pm
Yes I chose a source that was more convenient for the point I was making rather than the point you were making. My source backs my point, so I don't quite see the relevance of your other source.

Anyway, the claim was no one could find an instance of his contradicting himself -- and that I was able to do. Now, you can argue that makes me have a small mind, but that's a separate question.

Even on the face of it though, the statements are clearly contradictory.
I don't see them as "clearly contradictory". I suppose it's all in how one interprets "the haystack". You obviously feel that means to own international as part of the market. Others might take it to mean simply use index funds rather than active funds or individual stocks.

Did your source back you point by Mr. Bogle explaining the haystack to include international? If not, I don't think you have made a very good point.
You misunderstand. The entire point is to remove emotions and how one feels from the picture. Objectively, international equities are part of the "haystack" of equities. This cannot be debated. It's not a matter of interpretation. I buy Samsung, nestle, ford, and Gazprom products (presumably). These companies are public. It makes zero difference where they are domiciled that thy are considered equities.

My source doesn't need to show Bogle considering international as part of the haystack. Since that's a fact and he's clearly picking needles, I've shown all I need to.

Or are you saying international equities aren't equities in the same way US equities are?!
I would say you misunderstand. That is all your interpretation of what he meant by "the haystack". And your haystack may be different than the next guy's. Is Mr. Bogle wrong because his haystack doesn't include international bonds? Does your haystack include international bonds? That would be "the market", right?

How far does the haystack need to extend to be "the haystack"? :happy

If you don't cherry pick quotes from Bogle and pit them against each other just because you don't like his stance on international, you know what he means and what his advice has been over the years. He's talking about index funds compared to active funds.

Sorry, but you haven't shown much of anything as you have no clear way of saying what Mr. Bogle meant by the haystack. You're basically putting words in his mouth. That's not proving a point like you seem to think it is.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by xjz » Fri Oct 20, 2017 12:42 pm

chevca wrote:
Fri Oct 20, 2017 11:57 am
I would say you misunderstand. That is all your interpretation of what he meant by "the haystack". And your haystack may be different than the next guy's. Is Mr. Bogle wrong because his haystack doesn't include international bonds? Does your haystack include international bonds? That would be "the market", right?

How far does the haystack need to extend to be "the haystack"? :happy

If you don't cherry pick quotes from Bogle and pit them against each other just because you don't like his stance on international, you know what he means and what his advice has been over the years. He's talking about index funds compared to active funds.

Sorry, but you haven't shown much of anything as you have no clear way of saying what Mr. Bogle meant by the haystack. You're basically putting words in his mouth. That's not proving a point like you seem to think it is.
I don't think it's at all unclear what "the haystack" is referring to, and it isn't really a matter of opinion or difference of views. The haystack is the market. This is explicit. From Forbes:
In a 2013 interview, Bogle described this axiom as the "ultimate argument for index investing." Finding a winning "superstock" is exceedingly difficult to do, and the odds are stacked against any investor who tries. "Own the entire market," said Bogle, adding, "Don't do anything once you get the haystack. No more looking for needles."
In the narrow context of diversifying as the only objective, "the market" is also unambiguous. The market is not a US phenomenon. International equity is part of the market. The haystack includes international.

Does that mean that Bogle is being inconsistent? Your call, but I think the real take-home lesson is that there's simply more at play. For example, we can also agree that Bogle emphasizes the importance of lowering costs when investing. Typically, international equity funds have higher expenses than domestic. If we lived in a world in which Bogle fully embraced investing in international at market cap weight, it doesn't take too much imagination to see the alternate-universe-Bogleheads thread in which we're arguing that Bogle is being inconsistent because he's advocating for cutting costs as much as possible, but then advising the usage of higher-expense international equity instead of going all in with domestic US equity.

Drawing out the example further, remember that we typically think of "the market" as the stocks we can invest in, but that omits a massive fraction of the world's businesses - in particular, every privately-held, unlisted business. If the point of "buying the haystack" is to avoid second-guessing or missing out by owning a little of everything, why are we ignoring private equity? Easy: because the barrier for entry to private equity investment is much higher, so it's impractical for simple retail investors. It's part of the haystack, but the barn is locked up tight, so we'll make do with the hay we've got.

For my part, I think the higher cost and assorted risks of international investing are worth it to diversify away from the potential for US-specific risk, by the same logic that I'm more comfortable with total market than S&P 500. Maybe my mind would change if international were painfully more volatile, or much more expensive, but that isn't the case (at least, not anymore). My ideal world is to move all equity holdings to a Total World fund as soon as the costs become competitive. This is the path that allows me to avoid any second-guessing. But I fully acknowledge that there's more than one way to do it.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by patrick013 » Fri Oct 20, 2017 1:26 pm

I think international profits depend alot on their exports, amongst
themselves and the US. Their internal economies aren't geared up as
much as they could be and appear to have rather sporadic returns
when exports don't materialize. Here's some other negatives which
just point to smaller economies overall, but some excellent companies
also in the Intl indexes of course.

Foreign economies :
inflation - low
money supply - low
currency - unpredictable
real GNP - low
noncoincident correlation - unpredictable

Ten year returns are lousy so time will tell what they can muster up at the same
time in that column. I need more information and more return so I generally
stay with TSM or the 500.
age in bonds, buy-and-hold, 10 year business cycle

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by galeno » Fri Oct 20, 2017 1:35 pm

For us (non-USA domiciled Bogleheads with no USA tax treaty using Ireland denominated ETFs) USA domiciled equities are more expensive because of the 15% dividend tax. Our dividend tax for non-USA developed country equities is 7.5% and for EM equities is 10.8%.

For a USA domiciled investor it's the opposite. They will pay the non-USA developed and EM equity dividend taxes before they get the NET dividends. If in a taxable account they can get some of the dividend taxes back. If in a tax deductible tax deferred retirement account they must eat the taxes.

This is a very valid reason for USA domiciled investors to stick with USA only equities.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by saltycaper » Fri Oct 20, 2017 2:09 pm

acanthurus wrote:
Thu Oct 19, 2017 9:29 pm

Emerson famously wrote that a foolish consistency is the hobgoblin of small minds. Even if Bogle is being inconsistent,is he being foolish? And if he isn't being foolish, is that really an inconsistency?
I do not think Emerson's oft-quoted phrase has anything to do with this sort of inconsistency. "Foolish" is not describing the person who is being consistent, but rather the consistency the person is attempting to demonstrate. In other words, there may be foolish consistencies and unfoolish consistencies.

The context of the quote, below, may be helpful. Appearing after Emerson discusses the perils of conformity, it addresses consistency. It's not so much about holding contradictory worldviews at once as it is about not putting on a charade today to maintain in others' eyes your character of yesterday.

Emerson's quote might be applicable if Bogle advocated 25 years ago for US-only investing, changed his mind, and was pilloried for it (the fault of the eyes of the present), or if he didn't change his mind for no other reason than wanting to maintain his consistency so as to appeal to others (his fault). But, that's not what's happening here. He has long maintained his self-contradictory opinions at once. If we focus on the aspect of time, one might say he's being very consistent; he's just not being logical.
Ralph Waldo Emerson wrote:
The other terror that scares us from self-trust is our consistency; a reverence for our past act or word because the eyes of others have no other data for computing our orbit than our past acts, and we are loath to disappoint them.

But why should you keep your head over your shoulder? Why drag about this corpse of your memory, lest you contradict somewhat you have stated in this or that public place? Suppose you should contradict yourself; what then? It seems to be a rule of wisdom never to rely on your memory alone, scarcely even in acts of pure memory, but to bring the past for judgment into the thousand-eyed present, and live ever in a new day. In your metaphysics you have denied personality to the Deity, yet when the devout motions of the soul come, yield to them heart and life, though they should clothe God with shape and color. Leave your theory, as Joseph his coat in the hand of the harlot, and flee.

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do. He may as well concern himself with his shadow on the wall. Speak what you think now in hard words, and to-morrow speak what to-morrow thinks in hard words again, though it contradict every thing you said to-day. — 'Ah, so you shall be sure to be misunderstood.' — Is it so bad then to be misunderstood? Pythagoras was misunderstood, and Socrates, and Jesus, and Luther, and Copernicus, and Galileo, and Newton, and every pure and wise spirit that ever took flesh. To be great is to be misunderstood.

I suppose no man can violate his nature. All the sallies of his will are rounded in by the law of his being, as the inequalities of Andes and Himmaleh are insignificant in the curve of the sphere. Nor does it matter how you gauge and try him. A character is like an acrostic or Alexandrian stanza; — read it forward, backward, or across, it still spells the same thing. ...
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by TD2626 » Sun Oct 22, 2017 10:42 am

nedsaid wrote:
Fri Oct 20, 2017 11:01 am
TD2626 wrote:
Thu Oct 19, 2017 10:17 am
I sortof feel sorry for people for whom every single word they say is latched onto by article after article. Everyone's probably said some contradictory things at some points in their lives - but for people for whom every word is recorded by the headlines, there can be consequences to those contradictions. Living under a microscope like that either means that someone can't "think out loud" (which has substantial benefits) or does think out loud and gets ridiculed. Besides, quotes get magnified, taken out of context, and misinterpreted all the time in clickbait headlines. So what if someone, a long time ago, said two plus two equals five? Does that mean that they still believe in that, or that they truly can't add? Or were they trying to make a different point entirely? It's all too easy to take things out of context.
Great post. I have been saying much the same here. Sometimes I think that if John Bogle himself would take up an anonymous avatar and post here that he would be pilloried for not being Bogleheaded enough. He would be accused of contradicting himself, practicing market timing, advocating aggressive portfolios for retirees, flip-flopping, not rebalancing his portfolio enough, playing with active funds, owning an individual stock, etc., etc., etc.

When you look at Mr. Bogle and his career from 40,000 feet, you find a man who has been remarkably consistent during his career. He has overwhelmingly done what he advocates for others. Yes, he took a pseudonym and wrote an article defending active management. Yes, he signaled he was going to drastically reduce his stocks during the late 1990's though he in actual practice reduced his stocks in a slow and modest fashion. Yes, he presided over the disaster of Wellington management. Yes, he owns stock in T. Rowe Price. Yes, he invests in his son's quant fund. Yes, he has advocated strategic asset allocation when valuations get to extremes. The thing is, these were outliers, he mostly invests the way he tells us to invest and his philosophy has been remarkably consistent over time.

You have to give the guy credit for having the courage to try new things. As I said before, he has the courage to think outside his own box. He says rather surprising things from time to time. It shows that he thinks for himself and will speak his mind. His internal compass has guided him well and he always returns to his bedrock principles.
Thank you and I agree. "St. Jack" should be thought of positively because of two overwhelmingly good things that he did for the ordinary investor:

1. Starting the first large index funds and popularizing the notion of index investing by making it available to the public. The lower fees of indexing have saved investors billions over the years.
2. Operating Vanguard as a company with a mutual-like structure that puts its clients interests first and operates funds at-cost. If he had wanted to, Bogle could have instead made billions off of his investors.

These two above things are overwhelmingly positive. Even if you deeply disagree with his views on international investing, or find inconsistencies in some of his past statements, his actions and advocacy on behalf of ordinary retail investors are overwhelmingly positive contributions. It is really nitpicking, and in my opinion disrespectful, to use his past statements against him. For what it's worth, I'm saying this as someone who feels that having less than 20% international is irresponsible.

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Re: "Using Jack Bogle's own words against him when it comes to international investing"

Post by triceratop » Sun Oct 22, 2017 2:30 pm

saltycaper wrote:
Fri Oct 20, 2017 2:09 pm
acanthurus wrote:
Thu Oct 19, 2017 9:29 pm

Emerson famously wrote that a foolish consistency is the hobgoblin of small minds. Even if Bogle is being inconsistent,is he being foolish? And if he isn't being foolish, is that really an inconsistency?
I do not think Emerson's oft-quoted phrase has anything to do with this sort of inconsistency. "Foolish" is not describing the person who is being consistent, but rather the consistency the person is attempting to demonstrate. In other words, there may be foolish consistencies and unfoolish consistencies.

The context of the quote, below, may be helpful. Appearing after Emerson discusses the perils of conformity, it addresses consistency. It's not so much about holding contradictory worldviews at once as it is about not putting on a charade today to maintain in others' eyes your character of yesterday.

Emerson's quote might be applicable if Bogle advocated 25 years ago for US-only investing, changed his mind, and was pilloried for it (the fault of the eyes of the present), or if he didn't change his mind for no other reason than wanting to maintain his consistency so as to appeal to others (his fault). But, that's not what's happening here. He has long maintained his self-contradictory opinions at once. If we focus on the aspect of time, one might say he's being very consistent; he's just not being logical.
Ralph Waldo Emerson wrote:
The other terror that scares us from self-trust is our consistency; a reverence for our past act or word because the eyes of others have no other data for computing our orbit than our past acts, and we are loath to disappoint them.

But why should you keep your head over your shoulder? Why drag about this corpse of your memory, lest you contradict somewhat you have stated in this or that public place? Suppose you should contradict yourself; what then? It seems to be a rule of wisdom never to rely on your memory alone, scarcely even in acts of pure memory, but to bring the past for judgment into the thousand-eyed present, and live ever in a new day. In your metaphysics you have denied personality to the Deity, yet when the devout motions of the soul come, yield to them heart and life, though they should clothe God with shape and color. Leave your theory, as Joseph his coat in the hand of the harlot, and flee.

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do. He may as well concern himself with his shadow on the wall. Speak what you think now in hard words, and to-morrow speak what to-morrow thinks in hard words again, though it contradict every thing you said to-day. — 'Ah, so you shall be sure to be misunderstood.' — Is it so bad then to be misunderstood? Pythagoras was misunderstood, and Socrates, and Jesus, and Luther, and Copernicus, and Galileo, and Newton, and every pure and wise spirit that ever took flesh. To be great is to be misunderstood.

I suppose no man can violate his nature. All the sallies of his will are rounded in by the law of his being, as the inequalities of Andes and Himmaleh are insignificant in the curve of the sphere. Nor does it matter how you gauge and try him. A character is like an acrostic or Alexandrian stanza; — read it forward, backward, or across, it still spells the same thing. ...
Excellent post, thank you.

I'd add that critiquing an expert's simultaneously-conflicting views is not a personal critique. As such it isn't disrespectful at all to engage with someone's ideas. That would make this place something of a cult. Furthermore, we're not really using "past statements" against him; we are pointing out statements he repeats to this day do not make sense as a whole.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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