International Market Volatility? (Foreign stocks in freefall?)

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rgs92
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International Market Volatility? (Foreign stocks in freefall?)

Post by rgs92 » Tue Jun 19, 2018 12:18 pm

Are International Markets more volatile than the US Stock Market?
This is a different type of question from the common query of how much to allocate to foreign stocks.
I just wondered if the total international stock market index suffered from more shorter term volatility than the US market.

(OK, I plead guilty that this was prompted by today's 2.65% drop in the international index vs. a .65% drop in the total US market index. I can't shake that recency bias. I guess I need some rehab...)
Last edited by rgs92 on Tue Jun 19, 2018 12:55 pm, edited 1 time in total.

Tamalak
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Re: International Market Volatility?

Post by Tamalak » Tue Jun 19, 2018 12:19 pm

Yes, it is, at least from the perspective of USD. The stocks themselves are volatile, and then you have currency volatility on TOP of that.

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Sandtrap
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Re: International Market Volatility?

Post by Sandtrap » Tue Jun 19, 2018 12:22 pm

International.
2.65 % drop today.
9.65 % rise last quarter of 2018?
Net gain.

US Market gain.
.65% drop today.
2.65 % drop last quarter of 2018?

Who can predict?

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vineviz
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Re: International Market Volatility?

Post by vineviz » Tue Jun 19, 2018 12:57 pm

rgs92 wrote:
Tue Jun 19, 2018 12:18 pm
Are International Markets more volatile than the US Stock Market?
This is a different type of question from the common query of how much to allocate to foreign stocks.
I just wondered if the total international stock market index suffered from more shorter term volatility than the US market.
International stocks are not notably more volatile (for a U.S. investor) than domestic stocks are. Since 1970 they've been a little more volatile than large cap U.S. stocks but less volatile than U.S. small cap stocks.

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"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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rustymutt
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by rustymutt » Tue Jun 19, 2018 1:18 pm

I'm going to hang on to my memory of the 2000's in which for a large part was carried by internationals, developed markets.
And the US was not headed in that direction. It's part of a balanced portfolio of broad diversification :sharebeer , and has been, and well be. End of discussion.
I'm amazed at the wealth of Knowledge others gather, and share over a lifetime of learning. The mind is truly unique. It's nice when we use it!

MJW
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by MJW » Tue Jun 19, 2018 1:36 pm

rustymutt wrote:
Tue Jun 19, 2018 1:18 pm
And the US was not headed in that direction. It's part of a balanced portfolio of broad diversification :sharebeer , and has been, and well be. End of discussion.
Congratulations on your recent appointment to the post of Discussion Ender. :beer

alex_686
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Re: International Market Volatility?

Post by alex_686 » Tue Jun 19, 2018 3:32 pm

Tamalak wrote:
Tue Jun 19, 2018 12:19 pm
Yes, it is, at least from the perspective of USD. The stocks themselves are volatile, and then you have currency volatility on TOP of that.
Stocks have a standard deviation of 10% to 14%. Inflation adjusted currency risk for equities is 1%. Equities are a good hedge. What is even better is that the Purchasing Power Parity bounds that risk and it is mean reverting. The longer your time horizon the lower the risk is. After 10 years you can't even pick out the currency risk any more.

david1082b
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by david1082b » Tue Jun 19, 2018 3:44 pm

This is the original International stocks in free fall thread that appeared after Brexit viewtopic.php?t=193902

"Several European stock indexes as well as Japan's Nikkei are down 8-10%. "

somewhat more of a freefall than today's methinks.

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Artsdoctor
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by Artsdoctor » Tue Jun 19, 2018 4:11 pm

rgs92 wrote:
Tue Jun 19, 2018 12:18 pm
Are International Markets more volatile than the US Stock Market?
This is a different type of question from the common query of how much to allocate to foreign stocks.
I just wondered if the total international stock market index suffered from more shorter term volatility than the US market.

(OK, I plead guilty that this was prompted by today's 2.65% drop in the international index vs. a .65% drop in the total US market index. I can't shake that recency bias. I guess I need some rehab...)
Just remember. When you're buying your international funds, you're not just partaking in market volatility in other countries, you're partaking in currency volatility as well (if your fund is not hedged). Your funds will lose value as the dollar strengthens, all other things being equal. Some authorities believe that the dollar will gain in value during a trade war if it's perceived as a safe haven; however, I don't think anyone would take that as a guarantee.

visualguy
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by visualguy » Tue Jun 19, 2018 4:23 pm

The relatively low long-term returns of ex-US is a bigger problem with that investment than volatility...

rgs92
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by rgs92 » Tue Jun 19, 2018 10:59 pm

visualguy wrote:
Tue Jun 19, 2018 4:23 pm
The relatively low long-term returns of ex-US is a bigger problem with that investment than volatility...
Well, gee, that's even worse than I was thinking, a double whammy. I thought that higher volatility would at least pay off in higher returns...

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vineviz
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by vineviz » Wed Jun 20, 2018 10:40 am

visualguy wrote:
Tue Jun 19, 2018 4:23 pm
The relatively low long-term returns of ex-US is a bigger problem with that investment than volatility...
Whether international stocks have low long-term returns depends a lot on which period you look at.

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VAslim16
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Re: International Market Volatility? (Foreign stocks in freefall?)

Post by VAslim16 » Wed Jun 20, 2018 11:06 am

rgs92 wrote:
Tue Jun 19, 2018 10:59 pm
visualguy wrote:
Tue Jun 19, 2018 4:23 pm
The relatively low long-term returns of ex-US is a bigger problem with that investment than volatility...
Well, gee, that's even worse than I was thinking, a double whammy. I thought that higher volatility would at least pay off in higher returns...
Yeah I'm getting fired up with International. My IPS always in the past has said to stay 50/50 US/Int but I'm tempted to change it up a bit. Anybody else thinking the same? Nothing super drastic but was gonna go 55/45.

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