Who's doing 100% international equity?

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tennisplyr
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Who's doing 100% international equity?

Post by tennisplyr » Tue Mar 13, 2018 6:45 am

For those BHs living in the US, was wondering who's invested 100% in international equities only. Why are you doing this, what are the advantages, how's it going?
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LiveSimple
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Re: Who's doing 100% international equity?

Post by LiveSimple » Tue Mar 13, 2018 6:47 am

I assume, no one

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Re: Who's doing 100% international equity?

Post by tennisplyr » Tue Mar 13, 2018 7:21 am

LiveSimple wrote:
Tue Mar 13, 2018 6:47 am
I assume, no one
Give it time lol
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Re: Who's doing 100% international equity?

Post by pokebowl » Tue Mar 13, 2018 9:17 am

tennisplyr wrote:
Tue Mar 13, 2018 6:45 am
For those BHs living in the US, was wondering who's invested 100% in international equities only. Why are you doing this, what are the advantages, how's it going?
Is this the answer to the "Why international" discussion? Overall I can see no reason why a U.S. based investor to be 100% in international equities, other than perhaps performance chasing. Some could make the usual valuation arguments, however going 100% international, means you have written off the U.S. market from ever achieving higher returns then currently.

I would say I hold more international than most, but I stop at global market-cap weight, which is ~48% international YTD.
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Re: Who's doing 100% international equity?

Post by nisiprius » Tue Mar 13, 2018 9:27 am

I would be curious to hear any reason for going 100% international (i.e. 100% ex-US) other than a personal prediction (hunch, gamble, valuation-based forecast, macroeconomic prognostication).

Oh, possibly: "My human capital is 100% US and has zero value outside the United States, and my investment portfolio is so large that it is roughly equal to the present value of my human capital."

Otherwise, it's the flip side of Warren Buffett: "For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs."

(Anyone else think "lay more and larger eggs" was an unfortunate metaphor?)
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Re: Who's doing 100% international equity?

Post by Snowjob » Tue Mar 13, 2018 9:36 am

Perhaps if you operated some small US/domestic business for employment and were already using Tips & US Treasuries as your bonds you might think of doing 100% international for your equity??

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Re: Who's doing 100% international equity?

Post by sal paradise » Tue Mar 13, 2018 10:13 am

I've thought about it, and am currently at 55% international, where I've been for the last 5 years. I don't expect to go much higher than that.

There are some research shops like research affiliates who advocate for no US in some of their portfolios. I guess you could make the claim to go as low as 25% to replicate the total world GDP. US sits around 25% of total world GDP.

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Alexa9
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Re: Who's doing 100% international equity?

Post by Alexa9 » Tue Mar 13, 2018 10:26 am

I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.

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Re: Who's doing 100% international equity?

Post by lazyday » Tue Mar 13, 2018 10:31 am

Expected returns for US equity is much lower than for ex-US equity. I don't think you have to be crazy to be 100% ex US.

I'm at 83% ex-US.

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Re: Who's doing 100% international equity?

Post by john4546 » Tue Mar 13, 2018 10:59 am

Alexa9 wrote:
Tue Mar 13, 2018 10:26 am
I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
What about Japanese large-cap stocks?

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Re: Who's doing 100% international equity?

Post by chevca » Tue Mar 13, 2018 11:07 am

lazyday wrote:
Tue Mar 13, 2018 10:31 am
Expected returns for US equity is much lower than for ex-US equity. I don't think you have to be crazy to be 100% ex US.

I'm at 83% ex-US.
That sounds like our early leader.

Can you tell us why you have so much INT... simply higher expected return?

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Re: Who's doing 100% international equity?

Post by bgf » Tue Mar 13, 2018 11:25 am

i would feel comfortable holding only VXUS if it were currency hedged... in other words, i wouldn't be scared to do it. i think the results would be 'just fine.' still, id prefer my current allocation.

holding both US and International in roughly equal portions, lack of hedge doesn't bother me.
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Re: Who's doing 100% international equity?

Post by Ping Pong » Tue Mar 13, 2018 11:54 am

I’m 90% ex-US.

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Re: Who's doing 100% international equity?

Post by ETadvisor » Tue Mar 13, 2018 11:59 am

I'm 100% ex-US in my wife's Roth IRA :D
Last edited by ETadvisor on Tue Mar 13, 2018 12:00 pm, edited 1 time in total.

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Re: Who's doing 100% international equity?

Post by chevca » Tue Mar 13, 2018 11:59 am

New leader.

Any of you gutsy types feel like sharing why you hold so much ex-US? I mean, that was the point of the thread and all.. :happy

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Re: Who's doing 100% international equity?

Post by jhfenton » Tue Mar 13, 2018 12:15 pm

Alexa9 wrote:
Tue Mar 13, 2018 10:26 am
I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
+1 I'm 50% ex-US, but it's all small cap and emerging markets.

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Re: Who's doing 100% international equity?

Post by HomerJ » Tue Mar 13, 2018 12:20 pm

Ping Pong wrote:
Tue Mar 13, 2018 11:54 am
I’m 90% ex-US.
But why? You must have some good reasons.

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Re: Who's doing 100% international equity?

Post by FRANK2009 » Tue Mar 13, 2018 1:22 pm

When John Bogle and Warren Buffet recommend 100% international, I will consider it...

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Re: Who's doing 100% international equity?

Post by dkturner » Tue Mar 13, 2018 1:44 pm

Meine Schwiegermutter die in Deutschland lebt.

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Re: Who's doing 100% international equity?

Post by CyberGuy » Tue Mar 13, 2018 1:57 pm

For those with high international holdings, why not do something like VT?

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Re: Who's doing 100% international equity?

Post by ray.james » Tue Mar 13, 2018 2:00 pm

CyberGuy wrote:
Tue Mar 13, 2018 1:57 pm
For those with high international holdings, why not do something like VT?
expense ratio, less TLH opportunity in taxable.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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Re: Who's doing 100% international equity?

Post by saltycaper » Tue Mar 13, 2018 2:01 pm

I'm 100% international. The US is part of that, of course. It's going pretty well. Thanks for asking.
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ray.james
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Re: Who's doing 100% international equity?

Post by ray.james » Tue Mar 13, 2018 2:02 pm

jhfenton wrote:
Tue Mar 13, 2018 12:15 pm
Alexa9 wrote:
Tue Mar 13, 2018 10:26 am
I'm getting deja vu all over again from this thread. I remember a few people doing this that worked for big US corporations.
The lowest correlation is International Small Cap. I would also assume Emerging Markets would have a lower correlation as well.
International developed large cap is pretty tied in with the US.
+1 I'm 50% ex-US, but it's all small cap and emerging markets.
+1 my exact allocation as well. I was partially inspired by TrevH/Smallhi old international threads to this allocation.

edit: if interested start with this thread/this particular post from TrevH
viewtopic.php?p=485901#p485901
Last edited by ray.james on Tue Mar 13, 2018 2:23 pm, edited 2 times in total.
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Re: Who's doing 100% international equity?

Post by fennewaldaj » Tue Mar 13, 2018 2:05 pm

My allocation calls for 50% US/50% ex US with an allowance for an up to 5% shift based on valuations. I also wrote that I would revaluate this if the CAPE hits 45. IF that happens likely the most I would do is trip another 5-10% off US.

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Re: Who's doing 100% international equity?

Post by lazyday » Tue Mar 13, 2018 2:07 pm

I’m the 83% poster above.

It’s because of expected returns.

To predict returns, Bogle likes to take dividend yield + expected yearly growth + annualized change due to valuation mean reversion. Research Affiliates does something like this, assuming CAPE reverts halfway to a historical mean. A bit complicated what mean is used, and there’s other complications like some currency PPP reversion, but their methodology papers explain quite well. The 10 year prediction is 0.1% real for US and 4.5% real for EAFE. EM is higher.

The RA methodology makes some sense to me and I give it a lot of weight.

You can be lazy and just use 1/CAPE for a prediction. You could use this for a 7, 10, or 25 year prediction, maybe? If I remember correctly, that made for mediocre predictions in the past, in the US. Your prediction might be something like 3% for US vs 5% or so ex-US. There’s a thread about why 1/CAPE predicts returns, if you can’t find it I probably can. Here’s some CAPE data: viewtopic.php?t=224374 and you can click the StarCapital link to compare P/S and P/B valuations.

AQR makes 5-10 year predictions using two methods. Compared to the others in my post, their US prediction isn’t so much worse than ex-US. I can find a link if anyone asks.

GMO doesn’t share detailed methodology for their predictions, but they seem to have some history of at least getting the order right. At GMO.com look for a 7 year prediction. US is predicted to return much less than International or EM.

I don’t expect any of these predictions to be accurate. But it seems quite unlikely that US equity will return more than ex-US over the next couple decades.

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Re: Who's doing 100% international equity?

Post by 220volt » Tue Mar 13, 2018 3:08 pm

My employer matches 100% of the first 6% in my 401k, and on top of that, they're giving me extra 3%. That 3% is 100% in International.
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Re: Who's doing 100% international equity?

Post by bloom2708 » Tue Mar 13, 2018 3:17 pm

lazyday wrote:
Tue Mar 13, 2018 2:07 pm
I’m the 83% poster above.

It’s because of expected returns.

To predict returns, Bogle likes to take dividend yield + expected yearly growth + annualized change due to valuation mean reversion. Research Affiliates does something like this, assuming CAPE reverts halfway to a historical mean. A bit complicated what mean is used, and there’s other complications like some currency PPP reversion, but their methodology papers explain quite well. The 10 year prediction is 0.1% real for US and 4.5% real for EAFE. EM is higher.

The RA methodology makes some sense to me and I give it a lot of weight.

You can be lazy and just use 1/CAPE for a prediction. You could use this for a 7, 10, or 25 year prediction, maybe? If I remember correctly, that made for mediocre predictions in the past, in the US. Your prediction might be something like 3% for US vs 5% or so ex-US. There’s a thread about why 1/CAPE predicts returns, if you can’t find it I probably can. Here’s some CAPE data: viewtopic.php?t=224374 and you can click the StarCapital link to compare P/S and P/B valuations.

AQR makes 5-10 year predictions using two methods. Compared to the others in my post, their US prediction isn’t so much worse than ex-US. I can find a link if anyone asks.

GMO doesn’t share detailed methodology for their predictions, but they seem to have some history of at least getting the order right. At GMO.com look for a 7 year prediction. US is predicted to return much less than International or EM.

I don’t expect any of these predictions to be accurate. But it seems quite unlikely that US equity will return more than ex-US over the next couple decades.
I hope it works out. It fails the "nobody knows nothing" and "results may vary" sniff tests. Betting 60/40 instead of 50/50 or 40/60 (US to International) would make more sense. 83, 90, 100% international seems more like gambling. But, I truly know nothing and won't try to predict.

I've thought more and more about going 50/50/50/50. 50% stocks/50% bonds/50% US/50% International/50% Treasuries/50%corporates and any other 50/50s you can add.

The Nobody Knows Nothing 50/50 portfolio. :wink:
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Re: Who's doing 100% international equity?

Post by gmaynardkrebs » Tue Mar 13, 2018 3:30 pm

Since all of my salary, pension, home value, bank accounts, mms, and TIPS are in the US, all of the equity and non-TIPS bonds that I hold are un-hedghed non-US. I feel it adds some diversification and balance. I also feel the equity valuations are better non-US, but that is a minor factor.

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Re: Who's doing 100% international equity?

Post by All Seasons » Tue Mar 13, 2018 3:32 pm

As a Canadian investor... almost all my equity holdings are “international!” :sharebeer
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Re: Who's doing 100% international equity?

Post by ImmigrantSaver » Tue Mar 13, 2018 3:33 pm

bloom2708 wrote:
Tue Mar 13, 2018 3:17 pm


I've thought more and more about going 50/50/50/50. 50% stocks/50% bonds/50% US/50% International/50% Treasuries/50%corporates and any other 50/50s you can add.

The Nobody Knows Nothing 50/50 portfolio. :wink:
50/50 prepaying mortgage/investing in taxable :wink:

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Re: Who's doing 100% international equity?

Post by Solo Prosperity » Tue Mar 13, 2018 3:51 pm

Not 100% ex-US and I don't think I will ever be 100% any asset class, but at the start of 2016 I moved from 60/30/10 US/DM/EM (Pretty Standard) to 30/30/40 US/DM/EM (Not so standard). This what done for valuation reasons and I plan to keep this allocation for the time being and am going on year 3 now (I check once per year for potential geographic allocations when I plan to do my annual re-balance...Most years, nothing changes).

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Re: Who's doing 100% international equity?

Post by Nowizard » Tue Mar 13, 2018 4:56 pm

We are split between U.S. and International but currently add new contributions to International. Though we will ultimately keep the same ratios, International stocks have not recovered to the same degree as U.S. stocks and appear to us to be a better place to put new money since placing in either one fits our portfolio ratios.

Tim

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Re: Who's doing 100% international equity?

Post by nisiprius » Tue Mar 13, 2018 5:30 pm

For the record, the word "international" doesn't mean the same thing as "global." It means
1. Of, relating to, or involving two or more nations: an international commission; international affairs.

2. Extending across or transcending national boundaries: international fame.
For something to be an "international investment," your money has to cross a border. The Vanguard Total International Stock Index Fund contains no US stocks, while the Vanguard Total World Stock index Fund is only about half international (from a US point of view).
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Re: Who's doing 100% international equity?

Post by saltycaper » Tue Mar 13, 2018 5:41 pm

nisiprius wrote:
Tue Mar 13, 2018 5:30 pm

For something to be an "international investment," your money has to cross a border.
By that definition, none of us knows if we own any international stocks. You can buy or sell a share in an American-based company, and your money might cross the border. Likewise, you could buy a share in a Japanese company, and your money might not cross the border. Although I guess it all would be domestic, if the mutual fund company is US-based.
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Re: Who's doing 100% international equity?

Post by wootwoot » Tue Mar 13, 2018 5:46 pm

FRANK2009 wrote:
Tue Mar 13, 2018 1:22 pm
When John Bogle and Warren Buffet recommend 100% international, I will consider it...
If John Bogle and Warren Buffet recommended you jump off a building would you?

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Re: Who's doing 100% international equity?

Post by gmaynardkrebs » Tue Mar 13, 2018 5:48 pm

wootwoot wrote:
Tue Mar 13, 2018 5:46 pm
FRANK2009 wrote:
Tue Mar 13, 2018 1:22 pm
When John Bogle and Warren Buffet recommend 100% international, I will consider it...
If John Bogle and Warren Buffet recommended you jump off a building would you?
Not again.

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Re: Who's doing 100% international equity?

Post by saltycaper » Tue Mar 13, 2018 5:49 pm

wootwoot wrote:
Tue Mar 13, 2018 5:46 pm
FRANK2009 wrote:
Tue Mar 13, 2018 1:22 pm
When John Bogle and Warren Buffet recommend 100% international, I will consider it...
If John Bogle and Warren Buffet recommended you jump off a building would you?
What if John Bogle did and Warren Buffet didn't? Answer: Bungee jumping.
Quod vitae sectabor iter?

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Re: Who's doing 100% international equity?

Post by qwertyjazz » Tue Mar 13, 2018 5:56 pm

I am sorta 100% international with some creative math. If you ignore my Roth IRA and 401ks equivalents which are on autopilot and are either US total stock market, DFA value or target date funds, my taxable is 100% international. That is the only thing I am making conscious decisions on. I am building it to a certain level before making other choices. My goal is to minimize where I can make decisions, and, in that limited space, I am all in for international at this point.
This is simmilar to the 100% equities post with someone with annuities, pension and expected huge inheritance though.
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Re: Who's doing 100% international equity?

Post by staythecourse » Tue Mar 13, 2018 6:00 pm

nisiprius wrote:
Tue Mar 13, 2018 9:27 am
I would be curious to hear any reason for going 100% international (i.e. 100% ex-US) other than a personal prediction (hunch, gamble, valuation-based forecast, macroeconomic prognostication).
Agreed 100%. Then, of course, the same should be said of those in 100% U.S. :D

Good luck.
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Re: Who's doing 100% international equity?

Post by columbia » Tue Mar 13, 2018 6:12 pm

bgf wrote:
Tue Mar 13, 2018 11:25 am
i would feel comfortable holding only VXUS if it were currency hedged... in other words, i wouldn't be scared to do it. i think the results would be 'just fine.' still, id prefer my current allocation.

holding both US and International in roughly equal portions, lack of hedge doesn't bother me.
Well, you can...

https://www.ishares.com/us/products/273 ... -ex-us-etf

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Re: Who's doing 100% international equity?

Post by LiveSimple » Tue Mar 13, 2018 6:35 pm

staythecourse wrote:
Tue Mar 13, 2018 6:00 pm
nisiprius wrote:
Tue Mar 13, 2018 9:27 am
I would be curious to hear any reason for going 100% international (i.e. 100% ex-US) other than a personal prediction (hunch, gamble, valuation-based forecast, macroeconomic prognostication).
Agreed 100%. Then, of course, the same should be said of those in 100% U.S. :D

Good luck.
US is a more capitalist country, with a good sovereign system in place, for a better or a fair returns to the investors.

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Re: Who's doing 100% international equity?

Post by tennisplyr » Tue Mar 13, 2018 6:36 pm

Mmmm so expected return is the why, doesn't sound very BH to me.
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Re: Who's doing 100% international equity?

Post by columbia » Tue Mar 13, 2018 7:49 pm

Have we seen even a 20 year period since 1970, where international outpaced US?

staythecourse
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Re: Who's doing 100% international equity?

Post by staythecourse » Tue Mar 13, 2018 8:11 pm

LiveSimple wrote:
Tue Mar 13, 2018 6:35 pm
staythecourse wrote:
Tue Mar 13, 2018 6:00 pm
nisiprius wrote:
Tue Mar 13, 2018 9:27 am
I would be curious to hear any reason for going 100% international (i.e. 100% ex-US) other than a personal prediction (hunch, gamble, valuation-based forecast, macroeconomic prognostication).
Agreed 100%. Then, of course, the same should be said of those in 100% U.S. :D

Good luck.
US is a more capitalist country, with a good sovereign system in place, for a better or a fair returns to the investors.
Well great then you made the argument for 100% international equities. If you are correct then the reason to be 100% international equities is for greater return then U.S. equities since you are implying there is a greater systemic risk. That means if the basis of financial theory holds true an investor would require higher return for the higher systemic risk. Since over time return and risk of international developed is the same as U.S. equities either you are right or all of financial theory is wrong.

One is correct the other is wrong. I would bet there is a bit of home country bias in your comment. Comparing London the same as some frontier country is ABSURD. London and other developed counries (ex US developed) vs. U.S. have the same sovereign risk.

Good luck.
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Re: Who's doing 100% international equity?

Post by SimpleGift » Tue Mar 13, 2018 8:27 pm

columbia wrote:
Tue Mar 13, 2018 7:49 pm
Have we seen even a 20 year period since 1970, where international outpaced US?
Neither the U.S. nor international stocks appear to have dominated for long periods since 1970 (chart below). Not surprisingly, when one market is dominant for a period of time, valuations eventually get stretched between the two — with implications for each market's expected future returns.
Cordially, Todd

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LiveSimple
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Re: Who's doing 100% international equity?

Post by LiveSimple » Tue Mar 13, 2018 8:52 pm

staythecourse wrote:
Tue Mar 13, 2018 6:00 pm
Comparing London the same as some frontier country is ABSURD. London and other developed counries (ex US developed) vs. U.S. have the same sovereign risk.
Agreed !!!

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Re: Who's doing 100% international equity?

Post by AlohaJoe » Tue Mar 13, 2018 8:58 pm

lazyday wrote:
Tue Mar 13, 2018 2:07 pm
I’m the 83% poster above.

It’s because of expected returns.

To predict returns, Bogle likes to take dividend yield + expected yearly growth + annualized change due to valuation mean reversion.
I've never understood how Bogle reconciles his dire predictions for US equity returns with "only invest in the US" when his own methodology tells him that investing outside the US is better right now. I don't think he's ever talked about it has he? He was happy to market time in 2000 & 2008 when he thought US equity valuations were too high. I'm surprised he doesn't advocate it now with US/international.

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Re: Who's doing 100% international equity?

Post by MnD » Tue Mar 13, 2018 9:37 pm

nisiprius wrote:
Tue Mar 13, 2018 9:27 am
I would be curious to hear any reason for going 100% international (i.e. 100% ex-US) other than a personal prediction (hunch, gamble, valuation-based forecast, macroeconomic prognostication).
Government job, one claim on a government pension, two claims on Social Security, paid off house that has appreciated a lot in a not very cosmopolitan non-coastal city. I know no foreign languages and even my collectables have limited interest and market outside the US. Bonds are 70% US govt and 30% in a global bond fund that's current 65% US bonds.

So before we even head over to the equity portfolio, I have a huge stake that's dependant on Team USA economy for the sales, profits and taxes collected continuing to be successful. I'm at global market cap in my portfolio, but overall I'm really hugely tilted on financial exposure to USA Inc.
So I'd be perfectly comfortable being 100% ex-US equity as I'd still have a big US tilt. I'd be incredibly uncomfortable being 100% US equity.
If ex-US global market cap on equity goes to 75%, I'd sleep better at night.

beardsworth
Posts: 2135
Joined: Fri Jun 15, 2007 4:02 pm

Re: Who's doing 100% international equity?

Post by beardsworth » Tue Mar 13, 2018 9:56 pm

Here's thread, now quite a few years old, exploring a portfolio of only foreign stocks and only U.S. bonds. I bookmarked it at the time because I found the concept interesting.

viewtopic.php?p=581996

lazyday
Posts: 3297
Joined: Wed Mar 14, 2007 10:27 pm

Re: Who's doing 100% international equity?

Post by lazyday » Tue Mar 13, 2018 11:33 pm

bloom2708 wrote:
Tue Mar 13, 2018 3:17 pm
It fails the "nobody knows nothing" and "results may vary" sniff tests. .... 83, 90, 100% international seems more like gambling.
50/50 or market weighting seem like good defaults for equity, at least before considering taxes. It could be that the market is pricing US vs ex-US correctly after all, and I am adding uncompensated concentration risk.

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