It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

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HuckFinn
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It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by HuckFinn » Tue Aug 14, 2018 1:15 am

With a keen knowledge of the concept of "Stay the Course" and "Don't Buy High and Sell Low" and most importantly "Don't Try to Time the Market" I cannot simply put my head in the sand and pretend that the last ten years or more have been anything other then a disappointment for those of us with International exposure and for Vanguard who increased their clients exposure to International equities on their Target and Life strategy funds up to 40% over 3 years ago.

It's easy to stomach performance variables when they are described as "Growth of $10,000 over time" but what does this performance look like when applied to a larger number.... to real portfolio's for comfortable retirees or high net worth individuals?

Using Vanguard's Growth of $10,000 data for Total Stock Market (VTSMX) and Total International Market (VGTSX) I came up with a disheartening example using a larger portfolio below.
* I had to use Investor share class because Total International did not have an Admiral share class for ten years.

Example 1 -
10 years ago Investor A has a $2,000,000 balanced portfolio - 65% stock, 35% bond.
His $1,300,000 in equities are solely invested in the Total US Stock Market Fund (VTSMX)
At the end of 10 years his equity position (if left untouched) grows to...
$3,578,284

Example 2 -
10 years ago Investor B has a $2,000,000 balanced portfolio - 65% stock, 35% bond.
His $1,300,000 in equity is apportioned as 60% Total US Stock Market Fund = $780,000 (VTSMX) and 40% Total International Market $520,000 (VGTSX)

After ten years Total US Stock Market (VTSMX) grows to $2,146,970
After ten years Total International Market (VGTSX) grows to $720,552
Total equity after 10 years combining his US and INTL holdings = $2,867,522

Using actual ten year performance data Investor A, who chose not to invest Internationally ten years ago would be a whopping $710,762.00 ahead of the investor who went the 60/40 route.

I'll repeat... $710,762.00 ahead because he chose to invest simply in the US and not add an International Fund.

Ok, I know... for some this is the exact reason we might be tempted to re-balance and dump more into International. I get that! People said that 5 years ago, they said it three years ago.... and I think they will be saying it again ten years from now. I know it's foolish to chase performance in the rear view mirror but I also have to take an honest assessment and evaluate if the path I am on is the wisest course.

For the record I have slowly weened my personal Int'l exposure from about 35% to 14% over the years and am not adding to it.

PS... I do intend on reading this 10 years ago if it's still to be found.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by AlohaJoe » Tue Aug 14, 2018 1:24 am

Weren't the 10,000 other threads on international investing not enough for you?

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by columbia » Tue Aug 14, 2018 1:28 am

It’s your money and you should skip international, if that is your preference.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by catdude » Tue Aug 14, 2018 1:30 am

Huck, I can improve on that. If I'd been 100% in equities over the past 10 years, I'd have a much bigger portfolio than I have right now. Hindsight is always 20/20. Nobody knows what the future holds. In other words, "Nobody knows nuthin'."
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by randomguy » Tue Aug 14, 2018 1:30 am

https://www.portfoliovisualizer.com/bac ... alBond3=40


US investing has been a friggen disaster. International investor has 3.2 million. US investor has 2.6 million. That is 600k thousand dollars simply by choosing not to buy US stocks. I know people think I should be buying US stocks but screw that. I am going 100% international:)

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by vineviz » Tue Aug 14, 2018 2:06 am

HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
I know it's foolish to chase performance in the rear view mirror but I also have to take an honest assessment and evaluate if the path I am on is the wisest course.
I'm amazed at the number of investors who KNOW it is stupid to shoot themselves in the foot but, for whatever reason, pull the trigger nonetheless.

There's no doubt that many investors get scared out of positions due to poor recent performance, and index fund investors are NOT an exception to this rule.

The chart below includes only data from US equity index funds, but the story is this: for the past 15 years, the average index-fund investor has underperformed broad market pretty much always.

Image

In other words, index fund investors are using passive funds to make active bets within their equity portfolios and seem to do a pretty terrible job of it.

Selling an investment JUST BECAUSE IT HAS DROPPED IN VALUE is one of the most costly changes an investor can make to a portfolio.

(Source: https://vanguardadvisorsblog.com/2017/0 ... g-passive/)
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by CFM300 » Tue Aug 14, 2018 2:09 am

HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
$710,762.00 ahead because he chose to invest simply in the US and not add an International Fund.
He should have invested 100% his equity portion in QQQ (Nasdaq 100). Then he would have been more than $2.5 million ahead.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Valuethinker » Tue Aug 14, 2018 3:15 am

HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
With a keen knowledge of the concept of "Stay the Course" and "Don't Buy High and Sell Low" and most importantly "Don't Try to Time the Market" I cannot simply put my head in the sand and pretend that the last ten years or more have been anything other then a disappointment for those of us with International exposure and for Vanguard who increased their clients exposure to International equities on their Target and Life strategy funds up to 40% over 3 years ago.

It's easy to stomach performance variables when they are described as "Growth of $10,000 over time" but what does this performance look like when applied to a larger number.... to real portfolio's for comfortable retirees or high net worth individuals?

Using Vanguard's Growth of $10,000 data for Total Stock Market (VTSMX) and Total International Market (VGTSX) I came up with a disheartening example using a larger portfolio below.
* I had to use Investor share class because Total International did not have an Admiral share class for ten years.

Example 1 -
10 years ago Investor A has a $2,000,000 balanced portfolio - 65% stock, 35% bond.
His $1,300,000 in equities are solely invested in the Total US Stock Market Fund (VTSMX)
At the end of 10 years his equity position (if left untouched) grows to...
$3,578,284

Example 2 -
10 years ago Investor B has a $2,000,000 balanced portfolio - 65% stock, 35% bond.
His $1,300,000 in equity is apportioned as 60% Total US Stock Market Fund = $780,000 (VTSMX) and 40% Total International Market $520,000 (VGTSX)

After ten years Total US Stock Market (VTSMX) grows to $2,146,970
After ten years Total International Market (VGTSX) grows to $720,552
Total equity after 10 years combining his US and INTL holdings = $2,867,522

Using actual ten year performance data Investor A, who chose not to invest Internationally ten years ago would be a whopping $710,762.00 ahead of the investor who went the 60/40 route.

I'll repeat... $710,762.00 ahead because he chose to invest simply in the US and not add an International Fund.

Ok, I know... for some this is the exact reason we might be tempted to re-balance and dump more into International. I get that! People said that 5 years ago, they said it three years ago.... and I think they will be saying it again ten years from now. I know it's foolish to chase performance in the rear view mirror but I also have to take an honest assessment and evaluate if the path I am on is the wisest course.

For the record I have slowly weened my personal Int'l exposure from about 35% to 14% over the years and am not adding to it.

PS... I do intend on reading this 10 years ago if it's still to be found.
This is a classic bull market post. The US has done well, therefore it will always outperform.

Note the arbitrary choice of period. That's how you data mine.

And note the weighting drift. That is why we rebalance.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by steve321 » Tue Aug 14, 2018 3:59 am

CFM300 wrote:
Tue Aug 14, 2018 2:09 am
HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
$710,762.00 ahead because he chose to invest simply in the US and not add an International Fund.
He should have invested 100% his equity portion in QQQ (Nasdaq 100). Then he would have been more than $2.5 million ahead.
why not put all into Amazon?

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by sambb » Tue Aug 14, 2018 4:24 am

this thread has reminded me to buy international this week
buy low sell high is nice

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by typical.investor » Tue Aug 14, 2018 4:36 am

randomguy wrote:
Tue Aug 14, 2018 1:30 am
https://www.portfoliovisualizer.com/bac ... alBond3=40


US investing has been a friggen disaster. International investor has 3.2 million. US investor has 2.6 million. That is 600k thousand dollars simply by choosing not to buy US stocks. I know people think I should be buying US stocks but screw that. I am going 100% international:)
I officially vote your post as WORST BACKTESTED PERFORMANCE ever!

If you had wanted $7,379,043 for that exact time period, you'd have to have been 100% gold. The worst year was only -6.26% vs -30% to -34% for the 60% stock/40% bond portfolios.

So if we'd been 100% gold and switched into 100% US in 2010, and then knew when international was going to start to outperform ...
HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
For the record I have slowly weened my personal Int'l exposure from about 35% to 14% over the years and am not adding to it.
Interestingly, the percent of corporate stock held by foreign investors used to be a little over 10 percent (early 80's) . In 2016, the figure was 35 percent and climbing as Trump tax cuts give additional incentive. Ten years ago it was maybe 30%.

So the OP is holding less international at the same time foreigners are holding more US. Everybody wants more US equities. USA!

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by TwstdSista » Tue Aug 14, 2018 4:41 am

Sounds like a good reason to take advantage of the no minimum contribution requirement as well as the lowered ER for FTIPX (Fidelity Total International Index Fund, ER now 0.06%) and buy international in my solo 401k.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by pokebowl » Tue Aug 14, 2018 4:56 am

What happens if we look past a ten year window though? Such as here: viewtopic.php?t=185433#p2813780
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Call_Me_Op » Tue Aug 14, 2018 6:04 am

The OP is suffering from a severe case of Recency Bias.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by J295 » Tue Aug 14, 2018 6:23 am

Ahh ... so "it's different this time" regarding still holding international? I recall that "it's different this time" regarding all equities in 1987, 2000-01, and again in 2007-08 ....

Personally, our financial situation hasn't altered materially so our IPS (and allocations, including 1/3 of equities in international --- with a 50/50 equity/non-equity portfolio) aren't changing.

I've made lots of birdies following double bogeys. I don't consider double bogeys or recent international to be "disasters" even though neither are my preferred outcome.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Grt2bOutdoors » Tue Aug 14, 2018 6:42 am

sambb wrote:
Tue Aug 14, 2018 4:24 am
this thread has reminded me to buy international this week
buy low sell high is nice
I bought yesterday and I’ll be buying more in the coming days and weeks ahead. Stay the course!
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by ignition » Tue Aug 14, 2018 6:43 am

It's weird how the US keeps outperforming even though valuations have been higher relative to international for years.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by oldcomputerguy » Tue Aug 14, 2018 6:48 am

ignition wrote:
Tue Aug 14, 2018 6:43 am
It's weird how the US keeps outperforming even though valuations have been higher relative to international for years.
Not to be snarky, I'm genuinely curious: given that outperformance in large part has been the result of increase in equity price, which in turn results in the alleged overvaluation, isn't this statement sort of circular? That is, equities have outperformed, even though they're overvalued, but they're overvalued because their prices are so high, i.e. outperformed.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by 2b2 » Tue Aug 14, 2018 7:18 am

OP,

You may have heard the bell ring signalling that it's time to reduce your international equity position.
I didn't hear it myself.

The numbers you posted are interesting.
Why did you invest in international equity in the first place?
Serious question.

2b2

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by MossySF » Tue Aug 14, 2018 7:23 am

oldcomputerguy wrote:
Tue Aug 14, 2018 6:48 am
ignition wrote:
Tue Aug 14, 2018 6:43 am
It's weird how the US keeps outperforming even though valuations have been higher relative to international for years.
Not to be snarky, I'm genuinely curious: given that outperformance in large part has been the result of increase in equity price, which in turn results in the alleged overvaluation, isn't this statement sort of circular? That is, equities have outperformed, even though they're overvalued, but they're overvalued because their prices are so high, i.e. outperformed.
This is how markets have always work. Investor mania has always been a big factor in markets. Overvaluation leads to more overvaluation -- until it doesn't. And then it goes down and down and down where you think never see daylight.

What's more important? Increasing the odds you'll capture the highest returns or decreasing the odds you get the lowest returns?

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by camillus » Tue Aug 14, 2018 7:38 am

Vanguard’s outlook for global stock and bonds is the most subdued it has been in a decade. Elevated equity valuations, low interest rates, and compressed spreads have pulled the market’s efficient frontier into a lower orbit. In the U.S., equity returns are expected to hover in the 3-5% range, in stark contrast to the 10% annualized return generated over the last 30 years. Non-U.S. equity markets could see returns closer to the 5.5-7.5% range, emphasizing the benefits of a globally diversified portfolio in the years ahead. Additionally, the return forecast for fixed income is positive but muted in the 2-3% range for the next decade.
https://pressroom.vanguard.com/news/Res ... -2018.html
HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
With a keen knowledge of the concept of "Stay the Course" and "Don't Buy High and Sell Low" and most importantly "Don't Try to Time the Market" I cannot simply put my head in the sand
What happens when sell low assets to buy into assets at all time highs?

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by acegolfer » Tue Aug 14, 2018 7:42 am

HuckFinn wrote:
Tue Aug 14, 2018 1:15 am
Using actual ten year performance data Investor A, who chose not to invest Internationally ten years ago would be a whopping $710,762.00 ahead of the investor who went the 60/40 route.
Other than looking at the past performance, is there any reason to lower international diversification?

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by bgf » Tue Aug 14, 2018 7:43 am

i'm keeping mine. 60 US, 20 Int'l, 20 Emg.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by asif408 » Tue Aug 14, 2018 7:48 am

OP,

I'm not going to try too hard and convince you to stay the course with international. I'm just going to suggest you either invite those similar to you in this post or another post to explain why they want to, or already have, reduced or eliminated their international holdings. Then ask them to re-visit every year going forward to provide an update and see if they have the same opinion, and if they have added an international position back or increased their international allocation since the last time they posted. It would be an interesting case study in performance chasing and recency bias, particularly if international takes off in the next 5 years or so. If it doesn't happen then maybe you are correct and it is not needed.

I would also suggest, if you want some historical perspective on US vs. Int'l returns, to go back and read 2-3 investment books written in the 1990s: Global Investing by Ibbotson and Brinson, Against the Gods by Peter Bernstein, and The Intelligent Asset Allocator by William Bernstein (no relation to Peter). In those books (particularly the Global Investing Book and Against the Gods) you will find the case for including international was better when looking backwards 20 years, mainly because the data included in those books was from before the tech bubble starting. Now looking back 20 years you could draw the opposite conclusion, but getting some historical perspective from 20 years ago vs today may convince you that there is no assurance the US will be the best in the future.
Last edited by asif408 on Tue Aug 14, 2018 7:59 am, edited 1 time in total.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by oldcomputerguy » Tue Aug 14, 2018 7:58 am

pokebowl wrote:
Tue Aug 14, 2018 4:56 am
What happens if we look past a ten year window though? Such as here: viewtopic.php?t=185433#p2813780
Indeed. For example, if we look past the previous ten years to the ten before that, we see that the two portfolios the OP describes perform very, very closely to each other, with in fact a bit of outperformance by the portfolio containing international.

Just as a side data point, for what it's worth, I checked my own IRA account, which is at Fidelity and happens to contain an allocation to total US market (FSTVX) and international (FTIPX). Since I rolled my 401k out to this IRA at retirement last January, these allocations only go back about a year and a half, which granted is statistically insignificant; however, looking at the returns since I rolled it out, FSTVX has gained 19.5%, while FTIPX has gained 13.3%, demonstrating that international has indeed lagged domestic, but I would hardly call a 13% return in a year and a half a "disaster".
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by KlangFool » Tue Aug 14, 2018 7:59 am

OP,

If you cannot stay the course with a 3-funds portfolio, perhaps you should switch to a fund of funds. Something like a life strategy fund or target date fund.

It is because of folks choose to buy high and sell low aka buying whatever on fashion now. People like me making money by buying low and sell high.

KlangFool

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by lostdog » Tue Aug 14, 2018 8:05 am

randomguy wrote:
Tue Aug 14, 2018 1:30 am
https://www.portfoliovisualizer.com/bac ... alBond3=40


US investing has been a friggen disaster. International investor has 3.2 million. US investor has 2.6 million. That is 600k thousand dollars simply by choosing not to buy US stocks. I know people think I should be buying US stocks but screw that. I am going 100% international:)
+1
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Jordan4FI » Tue Aug 14, 2018 8:31 am

We also do not compare ourselves to one another... Mr. A and Mr. B do what they feel is best for them, and they are both winning!!! I would be very happy as Mr. B, he has grown much more than Mr. C the one who keeps moving funds around trying to get an edge on Mr. A and Mr. B....

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by stemikger » Tue Aug 14, 2018 8:41 am

I never invested in international, but not because it is not doing well it is because years ago I read Common Sense on Mutual Funds and John Bogle's chapter on that subject resonated with me so much that I felt it wasn't necessary.

Having said that, just when you stop investing in it, it will do better than the U.S. I will not invest in international even if that is the case because I just don't feel it is worth it and also believe the U.S. has a fair amount of built in international without the currency risk, the sovereign risk and the lack of regulation.

Don't chase the market returns, if you are a long term investor, and really thought about why you are doing things, it is easier to stay the course. On the other hand if you don't like international for other reasons, it may be time to do what I did and go all U.S. because that is what helps you stay the course.

For most long term investors there will be times when you will hate one or more of your assets because it is not doing well, but that is the point of a diversified portfolio and not a reason to change your strategy.

For the record, 3 very smart men don't think international is necessary for regular folks saving for the long term. John Bogle, Warren Buffett and Jim Collins.

Good Luck!
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by ReformedSpender » Tue Aug 14, 2018 8:49 am

Like others have pointed out, there is always more money to be made. However, no one knows what the future holds so in reality, it will forever be a case of "woulda, coulda, shoulda".

:beer
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Valuethinker » Tue Aug 14, 2018 8:56 am

stemikger wrote:
Tue Aug 14, 2018 8:41 am
I never invested in international, but not because it is not doing well it is because years ago I read Common Sense on Mutual Funds and John Bogle's chapter on that subject resonated with me so much that I felt it wasn't necessary.

Having said that, just when you stop investing in it, it will do better than the U.S. I will not invest in international even if that is the case because I just don't feel it is worth it and also believe the U.S. has a fair amount of built in international without the currency risk, the sovereign risk and the lack of regulation.

Don't chase the market returns, if you are a long term investor, and really thought about why you are doing things, it is easier to stay the course. On the other hand if you don't like international for other reasons, it may be time to do what I did and go all U.S. because that is what helps you stay the course.

For most long term investors there will be times when you will hate one or more of your assets because it is not doing well, but that is the point of a diversified portfolio and not a reason to change your strategy.

For the record, 3 very smart men don't think international is necessary for regular folks saving for the long term. John Bogle, Warren Buffett and Jim Collins.

Good Luck!
There are good reasons for a US investor not to invest in international:

- higher volatility with a very small gain in performance (depending on sub period, detracted) - you are taking on currency risk and generally that's a bad thing in investing. We accept it with international stocks because we believe Purchasing Power Parity holds in the long run - it all evens out in other words

- higher costs of international funds

- potential tax issues re reclaiming withheld tax on dividends (and A.N.Y. Other if appropriate)

These are all good reasons to not invest in international stocks.

Poor reasons are arguments that run along the lines of "the US is best because of better governance/ management of companies etc" with the implicit assumption that the market does not know this and that market valuations do not reflect this reality ie that somehow one can "outsmart the market on this one". That is, in essence, an argument for inefficient markets - publicly available information is not priced into markets and so you can exploit it as an investor.

I am afraid John Bogle's patriotism (and paste experience) leads him to state somewhat suspect conclusions from an efficient markets perspective. Spurious use of Warren Buffett's words & strategies is just that - Berkshire Hathaway has lots of overseas assets (although its quoted investments are largely confined to the USA, I believe). There are plenty of badly governed companies that Buffett avoids in the USA - his approach is about the rifle shot, not about the geographic location (he made the largest acquisition of an Israeli company by a foreign one).

Note that for those of us who are not US based, such a decision would imply an underweighting or zero weighting in US stocks, which would be a serious mistake. The argument, made by Americans, is slightly surreal to the rest of us.

Vanguard has suggested 20 to 40% weightings of equity portfolios has led to max return/ min volatility I believe (for a US investor). Say around 30% is probably best. On a 60/40 E/ B portfolio that is c. 18% international stocks. So 15-20% and be done with it.
Last edited by Valuethinker on Tue Aug 14, 2018 8:58 am, edited 1 time in total.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by jeffyscott » Tue Aug 14, 2018 8:56 am

I think rather than arbitrarily looking at the most recent 10 years, the sensible way to compare is to look from a market high to another high or from a low to a low. From the high in 2000 to the high in 2007 international won, same for the 2002 low to the 2009 low. All the outperformance of US is only due to the last 5 years or so.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by FRANK2009 » Tue Aug 14, 2018 9:02 am

Since investing by looking at the past isn't the best practice, I say 50% US equity/50% international. Mix in bonds in an amount that allows you to sleep well, and you're done. Stay the course as best you can. Yes I'm a simple man...

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by MotoTrojan » Tue Aug 14, 2018 9:10 am

I’m still just blown away that nobody else liked Dominos pizza like I did in the last decade and went 100%. I turned my $20M into a couple billion bucks and we are arguing about $700K?!? That’s less than I spend on thin crust per year now.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by triceratop » Tue Aug 14, 2018 9:13 am

I bought international stocks last week. I might buy more this week. Maybe I'll buy OP's.

Past performance etc. etc.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Toons » Tue Aug 14, 2018 9:14 am

Isn't hindsight wonderful
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by core4portfolio » Tue Aug 14, 2018 9:16 am

I dont own international as my IPS doesnt says to do so.
check your IPS when you are in confusion.
There are chances in future international may take lead than US
You stay the course !!!!
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by JW-Retired » Tue Aug 14, 2018 9:17 am

jeffyscott wrote:
Tue Aug 14, 2018 8:56 am
I think rather than arbitrarily looking at the most recent 10 years, the sensible way to compare is to look from a market high to another high or from a low to a low. From the high in 2000 to the high in 2007 international won, same for the 2002 low to the 2009 low. All the outperformance of US is only due to the last 5 years or so.
Yep, nice plot. It occurs to me we might even be able to find another similar thread back in 2010 shouting INT'L US INVESTING HAS BEEN A DISASTER! ....or similar. I'm happy I stayed the course all through that.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by oldzey » Tue Aug 14, 2018 9:19 am

0% International works for me. It is in my IPS, and I stay the course.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by jhfenton » Tue Aug 14, 2018 9:20 am

I don't mumble, but I am sticking with our 50% ex-US allocation.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by sschullo » Tue Aug 14, 2018 9:22 am

You believe that internationals have been a disaster, what about the millions of investors who stayed in MM accounts paying zilch for the last decade because they got burned in the last financial disaster, 2008?

Stay the course, I'll stick with my boring low cost diversified and a very simple, uncomplicated portfolio of international, domestic and bonds.
Last edited by sschullo on Tue Aug 14, 2018 9:24 am, edited 2 times in total.
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Post by sschullo » Tue Aug 14, 2018 9:23 am

duplicate
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by HuckFinn » Tue Aug 14, 2018 9:26 am

As the original poster of this thread I have to admit to enjoying the variety of responses.

For those that suggest the dates were cherry picked sorry… that was the only current 10 year return data that exists.

There is a bigger picture I am trying to relay that is best emphasized in the story below (article by Margo Boster). Though it is about corporate culture I think it’s relevance to “group think” are essential.

Reminder… Jack Bogle was… and still is a rebel.

[Article]
Have you ever wonder why certain things are as they are in your work environment? I often share the story of five monkeys and a banana. An experiment is conducted in which five rhesus monkeys were placed in a cage together with a banana hanging high on a rope outside the reach of the monkeys. A step ladder was placed in the cage that would enable the monkeys to reach the banana. Whenever one of the monkeys attempted to climb and reach for the banana, ALL monkeys were sprayed with freezing cold water.
After a few attempts, all the monkeys learned the association between reaching for the banana and the group collective punishment of being sprayed with freezing water. There was no longer need for the water; no monkeys would attempt to reach the banana.
The researcher then replaced one of the five monkeys with a new monkey. The new monkey, not aware of the icy water treatment, tried to reach for the banana. Within a fraction of a second the other four monkeys attacked him again and again, until he no longer tried to reach the banana. One by one, the monkeys who had experienced the original icy water treatment were replaced by a new monkey. With the introduction of each new monkey, the other monkeys would attack him until he quit trying for the banana.
Eventually, the cage was populated by five new monkeys, none who had experienced the icy water treatment. The experimenter then introduced a new monkey to the cage. When this monkey tried to reach for the banana, all five monkeys attacked him.
The story goes that even though none of these monkeys knew about the collective punishment of icy water, somewhat along the way they learnt that reaching for the banana is not allowed. They become the guardians of this rule without knowing its purpose.
Culture is created over time, and often habits and practices are instilled and repeated without anyone knowing the origin of the behavior. But to be accepted, most people diligently follow the behaviors or the others in the group will work to reinforce and maintain the current culture.

Next time someone says, “That isn’t how we do things here,” ask the question “Why?”

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by visualguy » Tue Aug 14, 2018 9:27 am

OP - you are correct. You can look back 20 years as well, not just 10. Ex-US indexing has not shown itself to be a good investment when looking at the returns and volatility.

I think an interesting question is why the US has been so much better. Part of it is US dominance in certain tech areas (FAANG, etc.), and there are other factors. There really is no other huge economy in the world that's similar to the US in how it's run - it is unique.

Instead of diversifying into ex-US, I would diversify into a different type of asset, namely direct real estate.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by HEDGEFUNDIE » Tue Aug 14, 2018 9:28 am

It’s only been a disaster because of currency risk. The good news is you can buy international funds that hedge out currency risk.

Check out DBEF, compare it against VEA. Much less of a disaster.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by pascal » Tue Aug 14, 2018 9:29 am

Investing in SF Bay area real estate between 2009 to 2017 outstrips US stock market gains. Brb.. /s
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by wootwoot » Tue Aug 14, 2018 9:30 am

Talk about cherry picking your timeline. You'll likely see the exact opposite results by taking the 10 year timeframe prior to this one.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Grt2bOutdoors » Tue Aug 14, 2018 9:32 am

stemikger wrote:
Tue Aug 14, 2018 8:41 am
I never invested in international, but not because it is not doing well it is because years ago I read Common Sense on Mutual Funds and John Bogle's chapter on that subject resonated with me so much that I felt it wasn't necessary.

Having said that, just when you stop investing in it, it will do better than the U.S. I will not invest in international even if that is the case because I just don't feel it is worth it and also believe the U.S. has a fair amount of built in international without the currency risk, the sovereign risk and the lack of regulation.

Don't chase the market returns, if you are a long term investor, and really thought about why you are doing things, it is easier to stay the course. On the other hand if you don't like international for other reasons, it may be time to do what I did and go all U.S. because that is what helps you stay the course.

For most long term investors there will be times when you will hate one or more of your assets because it is not doing well, but that is the point of a diversified portfolio and not a reason to change your strategy.

For the record, 3 very smart men don't think international is necessary for regular folks saving for the long term. John Bogle, Warren Buffett and Jim Collins.

Good Luck!
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by TIAX » Tue Aug 14, 2018 9:35 am

Call_Me_Op wrote:
Tue Aug 14, 2018 6:04 am
The OP is suffering from a severe case of Recency Bias.
Please tell me there's a cure.

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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by 300bigboys » Tue Aug 14, 2018 9:35 am

Help me understand something,

The purpose of holding international (and bonds) in a 3-fund portfolio is not entirely about maximizing returns, but rather places a premium on stability and insurance against complete collapse. Right?

If that's the case, the purpose of international is also to protect in the case of the dollar imploding. Is that right?

There's more to it than "maximum profits", otherwise none of us would be holding bonds at all.

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