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

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

Post by Tamalak » Thu Oct 25, 2018 9:20 am

zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Yes :D

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

Post by visualguy » Thu Oct 25, 2018 10:03 am

zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.

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

Post by selters » Thu Oct 25, 2018 10:28 am

visualguy wrote:
Thu Oct 25, 2018 10:03 am
zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.

This is false. Since January 2000, the MSCI USA index has had a gross return of 191%. The MSCI ACWI index (including Emerging Markets) has returned 126%. From 2000 to 2003, returns were pretty equal. Then ACWI ex US had a huge lead all the way from 2003 until 2015. For the time period from January 2000 through October 2018, 100% of the outperformance of the US over this time period has come in the last 42 months.

BW1985
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by BW1985 » Thu Oct 25, 2018 10:32 am

MotoTrojan wrote:
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.
Wow, just looked at their chart. I had no idea!
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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

Post by visualguy » Thu Oct 25, 2018 10:57 am

selters wrote:
Thu Oct 25, 2018 10:28 am
visualguy wrote:
Thu Oct 25, 2018 10:03 am
zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.

This is false. Since January 2000, the MSCI USA index has had a gross return of 191%. The MSCI ACWI index (including Emerging Markets) has returned 126%. From 2000 to 2003, returns were pretty equal. Then ACWI ex US had a huge lead all the way from 2003 until 2015. For the time period from January 2000 through October 2018, 100% of the outperformance of the US over this time period has come in the last 42 months.
Nothing is false. The Ex-US index is a bit higher than what it reached in 2000. All you got on money invested then is dividends. Much longer term performance has been poor as well. You'll find periods during which it performed better or worse, but in the long run (decades) it has been a bad investment.

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

Post by MotoTrojan » Thu Oct 25, 2018 11:08 am

BW1985 wrote:
Thu Oct 25, 2018 10:32 am
MotoTrojan wrote:
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.
Wow, just looked at their chart. I had no idea!
Yeah pretty wild indeed.

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

Post by CULater » Thu Oct 25, 2018 7:02 pm

visualguy wrote:
Thu Oct 25, 2018 10:57 am
selters wrote:
Thu Oct 25, 2018 10:28 am
visualguy wrote:
Thu Oct 25, 2018 10:03 am
zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.

This is false. Since January 2000, the MSCI USA index has had a gross return of 191%. The MSCI ACWI index (including Emerging Markets) has returned 126%. From 2000 to 2003, returns were pretty equal. Then ACWI ex US had a huge lead all the way from 2003 until 2015. For the time period from January 2000 through October 2018, 100% of the outperformance of the US over this time period has come in the last 42 months.
Nothing is false. The Ex-US index is a bit higher than what it reached in 2000. All you got on money invested then is dividends. Much longer term performance has been poor as well. You'll find periods during which it performed better or worse, but in the long run (decades) it has been a bad investment.
You're both wrong. Global ex-US has returned 91% since the beginning of 2000 (not 191%), or an annualized 3.51% compounded return.
On the internet, nobody knows you're a dog.

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

Post by visualguy » Thu Oct 25, 2018 7:23 pm

CULater wrote:
Thu Oct 25, 2018 7:02 pm
visualguy wrote:
Thu Oct 25, 2018 10:57 am
selters wrote:
Thu Oct 25, 2018 10:28 am
visualguy wrote:
Thu Oct 25, 2018 10:03 am
zonto wrote:
Thu Oct 25, 2018 9:15 am

Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.

This is false. Since January 2000, the MSCI USA index has had a gross return of 191%. The MSCI ACWI index (including Emerging Markets) has returned 126%. From 2000 to 2003, returns were pretty equal. Then ACWI ex US had a huge lead all the way from 2003 until 2015. For the time period from January 2000 through October 2018, 100% of the outperformance of the US over this time period has come in the last 42 months.
Nothing is false. The Ex-US index is a bit higher than what it reached in 2000. All you got on money invested then is dividends. Much longer term performance has been poor as well. You'll find periods during which it performed better or worse, but in the long run (decades) it has been a bad investment.
You're both wrong. Global ex-US has returned 91% since the beginning of 2000 (not 191%), or an annualized 3.51% compounded return.
It's exactly what I said. VGTSX (Vanguard total Intl) was 14.21 in early 2000, and it is 15.78 now. It pretty much went nowhere other than dividends, which is what I said. What is wrong?

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

Post by CULater » Thu Oct 25, 2018 10:17 pm

It's just that comparing current price of VGTSX to the price in 2000 doesn't tell you much about compounded returns with dividends reinvested, which turns out to have been 91% which is not really "going nowhere" since 2000. Besides, it's misleading because VGTSX delivered similar returns to U.S. stocks until 2013. And since then, it's not that the returns of VGTSX have been so miserable (compound annual return of 5.5%) as much as the fact that U.S. returns have been crazy high (compound annual return of 15.3%). Will that continue, do you think?
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visualguy
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by visualguy » Thu Oct 25, 2018 10:38 pm

CULater wrote:
Thu Oct 25, 2018 10:17 pm
It's just that comparing current price of VGTSX to the price in 2000 doesn't tell you much about compounded returns with dividends reinvested, which turns out to have been 91% which is not really "going nowhere" since 2000. Besides, it's misleading because VGTSX delivered similar returns to U.S. stocks until 2013. And since then, it's not that the returns of VGTSX have been so miserable (compound annual return of 5.5%) as much as the fact that U.S. returns have been crazy high (compound annual return of 15.3%). Will that continue, do you think?
The index went nowhere, and the CAGR was 3.51% which is very lousy when considering the tremendous volatility. The longer term results for 30 years or 50 years aren't exciting either, by the way. You can find periods when it did better or worse, but in the long run it has been a dud.

In terms of the future... I think the poor performance of ex-US will continue. Nothing changed - same problems. No reason for the next couple of decades or so to be any different than what we've seen in the past. Poor returns and high volatility. For the US... I think it will continue to do better than ex-US in the time frame that's relevant to most of us. The US isn't about to be unseated and replaced as the best major stock market that soon. I don't know about 50 years from now or 100 years from now, but there isn't enough time for it to happen over the next 30 or 40 years.

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

Post by kosomoto » Thu Oct 25, 2018 10:53 pm

visualguy wrote:
Thu Oct 25, 2018 10:38 pm
CULater wrote:
Thu Oct 25, 2018 10:17 pm
It's just that comparing current price of VGTSX to the price in 2000 doesn't tell you much about compounded returns with dividends reinvested, which turns out to have been 91% which is not really "going nowhere" since 2000. Besides, it's misleading because VGTSX delivered similar returns to U.S. stocks until 2013. And since then, it's not that the returns of VGTSX have been so miserable (compound annual return of 5.5%) as much as the fact that U.S. returns have been crazy high (compound annual return of 15.3%). Will that continue, do you think?
The index went nowhere, and the CAGR was 3.51% which is very lousy when considering the tremendous volatility. The longer term results for 30 years or 50 years aren't exciting either, by the way. You can find periods when it did better or worse, but in the long run it has been a dud.

In terms of the future... I think the poor performance of ex-US will continue. Nothing changed - same problems. No reason for the next couple of decades or so to be any different than what we've seen in the past. Poor returns and high volatility. For the US... I think it will continue to do better than ex-US in the time frame that's relevant to most of us. The US isn't about to be unseated and replaced as the best major stock market that soon. I don't know about 50 years from now or 100 years from now, but there isn't enough time for it to happen over the next 30 or 40 years.
The US has never had a long run period of 30 years or more with lower than 6% annualized. International stocks have gone lower than 5%. There is honestly something fundamentally wrong with non US stocks as a whole but I don’t know what.

Da5id
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Da5id » Thu Oct 25, 2018 10:56 pm

visualguy wrote:
Thu Oct 25, 2018 10:38 pm
In terms of the future... I think the poor performance of ex-US will continue. Nothing changed - same problems. No reason for the next couple of decades or so to be any different than what we've seen in the past. Poor returns and high volatility. For the US... I think it will continue to do better than ex-US in the time frame that's relevant to most of us. The US isn't about to be unseated and replaced as the best major stock market that soon. I don't know about 50 years from now or 100 years from now, but there isn't enough time for it to happen over the next 30 or 40 years.
So to summarize, US market cap will asymptotically approach 100% of world stock market cap because US stocks will out perform forever. Or is there some other conclusion?

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

Post by visualguy » Thu Oct 25, 2018 11:02 pm

Da5id wrote:
Thu Oct 25, 2018 10:56 pm
visualguy wrote:
Thu Oct 25, 2018 10:38 pm
In terms of the future... I think the poor performance of ex-US will continue. Nothing changed - same problems. No reason for the next couple of decades or so to be any different than what we've seen in the past. Poor returns and high volatility. For the US... I think it will continue to do better than ex-US in the time frame that's relevant to most of us. The US isn't about to be unseated and replaced as the best major stock market that soon. I don't know about 50 years from now or 100 years from now, but there isn't enough time for it to happen over the next 30 or 40 years.
So to summarize, US market cap will asymptotically approach 100% of world stock market cap because US stocks will out perform forever. Or is there some other conclusion?
You did not summarize, you distorted. I didn't say anything about forever. I don't care about forever - I have very few decades left to live.

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

Post by JoMoney » Fri Oct 26, 2018 12:00 am

visualguy wrote:
Thu Oct 25, 2018 11:02 pm
Da5id wrote:
Thu Oct 25, 2018 10:56 pm
visualguy wrote:
Thu Oct 25, 2018 10:38 pm
In terms of the future... I think the poor performance of ex-US will continue. Nothing changed - same problems. No reason for the next couple of decades or so to be any different than what we've seen in the past. Poor returns and high volatility. For the US... I think it will continue to do better than ex-US in the time frame that's relevant to most of us. The US isn't about to be unseated and replaced as the best major stock market that soon. I don't know about 50 years from now or 100 years from now, but there isn't enough time for it to happen over the next 30 or 40 years.
So to summarize, US market cap will asymptotically approach 100% of world stock market cap because US stocks will out perform forever. Or is there some other conclusion?
You did not summarize, you distorted. I didn't say anything about forever. I don't care about forever - I have very few decades left to live.
FWIW, for one or the other to outperform in total return doesn't necessarily require either to grow or shrink its free-float market cap relative to the other. Stocks payout dividends and perform share repurchases/buybacks.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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

Post by ignition » Fri Oct 26, 2018 6:25 am

visualguy wrote:
Thu Oct 25, 2018 10:03 am
zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.
According to the credit suisse yearbook 2016 Ex-US outperformed the US from 1966-2015.

Da5id
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Da5id » Fri Oct 26, 2018 6:56 am

visualguy wrote:
Thu Oct 25, 2018 11:02 pm
Da5id wrote:
Thu Oct 25, 2018 10:56 pm
visualguy wrote:
Thu Oct 25, 2018 10:38 pm
In terms of the future... I think the poor performance of ex-US will continue. Nothing changed - same problems. No reason for the next couple of decades or so to be any different than what we've seen in the past. Poor returns and high volatility. For the US... I think it will continue to do better than ex-US in the time frame that's relevant to most of us. The US isn't about to be unseated and replaced as the best major stock market that soon. I don't know about 50 years from now or 100 years from now, but there isn't enough time for it to happen over the next 30 or 40 years.
So to summarize, US market cap will asymptotically approach 100% of world stock market cap because US stocks will out perform forever. Or is there some other conclusion?
You did not summarize, you distorted. I didn't say anything about forever. I don't care about forever - I have very few decades left to live.
I like to think I extrapolated or tried to make a reductio ad absurdem argument. But OK, fair enough.

I don't think there is enough info to say prospectively that US will outperform in any particular period, or to say that the knowledge/belief of many in US out-performance isn't already baked into the market pricing. If you have such confidence, great. I think it is not possible to know. And using my crystal ball and very unscientific decision process, I have 2/3 US and 1/3 Int'l equities. Based in good part on Vanguards paper on the subject, which struck me as persuasive (and I have some level of trust in Vanguard). Will that give better or less variable returns than 100% US going forward? Darned if I know.

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

Post by CULater » Fri Oct 26, 2018 9:08 am

I'm not a strong supporter of investing internationally, but a few things concern me about being all in U.S. stocks:

- First, there's a huge difference in P/E ratios with U.S. being about 21 and EAFE about 14
- Second, the returns on U.S. stocks over the past 5 years have been abnormally high, over 15% per year compounded.
- Third, the U.S. dollar has been very strong against foreign currencies, which has provide a large tailwind to U.S. stock returns

If you believe in mean reversion, it would seem to suggest that the above trends can't continue and might revert. It does not seem logical to believe that you can invest in the safest market in the world (the U.S.) while also expecting to have the best returns. The relationship between risk and return doesn't work this way, at least for long.

Of course, nobody knows the future but it would seem that now might be prudent to reconsider owning some foreign stocks for the reasons above. Or at least reducing the amount of U.S. stocks held if foreign stocks are anathema.
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Da5id
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Da5id » Fri Oct 26, 2018 11:05 am

To put what I said differently, I believe if you are against international investing you may be saying the following:

1) US equities will have a greater return than international equities, at least over the near and medium time frame
2) Point 1 can be knowable with a reasonable degree of confidence based on public information/data
3) Despite that, the different prospective returns are not accurately priced into the markets

For those against international investing, which of those 3 assumptions do you not agree with? There may be reasons some people invest in their "inferior to the US" markets like home country bias or maybe ease of investing, or perhaps tax advantages of some sort. Still, there are lots of investors not moved by those biases, why wouldn't US and international equities reach some equilibrium based on pricing in the (assume it) obvious superiority of US equities?

What makes me uncomfortable about this is that bogleheads would in the main not think well of those claiming to be able to pick winning stocks or market sectors prospectively based on the publicly known information about those stocks/markets. Why is the ability to pick a country different?

ge1
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by ge1 » Sat Oct 27, 2018 5:50 am

I'm not advocating against investing in international stocks - but it is a reality that the continued underperformance over long periods is - at least to me - astonishing. And it's even less the underperformance (we could argue US stocks are overvalued due to recent run up in Tech etc etc), but the miserable performance in absolute terms. The Vanguard International ETF VGTSX was created in April 1996, since then the annual return including dividends has been 4.4%. And to make matters worse, it doesn't seem that international stocks are currently tremendously undervalued, from all that I'm reading it sounds like they are probably fair valued. Nor was 1996 a specific "bubble peak" which would depress returns going forward.

Reading some other posts it sounds like going back longer periods the returns would be better, but not sure how accessible international markets were back then for retail investors.

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

Post by Valuethinker » Sat Oct 27, 2018 6:07 am

ge1 wrote:
Sat Oct 27, 2018 5:50 am
I'm not advocating against investing in international stocks - but it is a reality that the continued underperformance over long periods is - at least to me - astonishing. And it's even less the underperformance (we could argue US stocks are overvalued due to recent run up in Tech etc etc), but the miserable performance in absolute terms. The Vanguard International ETF VGTSX was created in April 1996, since then the annual return including dividends has been 4.4%. And to make matters worse, it doesn't seem that international stocks are currently tremendously undervalued, from all that I'm reading it sounds like they are probably fair valued. Nor was 1996 a specific "bubble peak" which would depress returns going forward.

Reading some other posts it sounds like going back longer periods the returns would be better, but not sure how accessible international markets were back then for retail investors.
There were international mutual funds back in the early 1980s - I bought some of them. However they often came with loads, and with high Expense Ratios (I don't believe disclosure was as good in those days, either).

There's a couple of factors:

- I would need to check but appreciation of USD has been a factor I think

- International has been hit by Japan, which was c half of world stock market capitalization (?ex US? not sure) in 1989

- 2 sectors are key to US outperformance since 2008:

1. tech sector. Unlike the dot com bubble, the financial performance of the FAANGs + Microsoft is absolutely extraordinary. Apple and Google are the world's most profitable companies *ever* in terms of profits generated and underlying cash flow. Microsoft is too. (I am not sure where Google & Microsoft rank). Netflix is harder to explain, it's about valuation per subscriber in a negative cash flow model. Facebook has grown very fast. Amazon we know, it's about the rate of sales growth (and the profitability of Amazon Web Services).

Whilst it's hard to explain the value of Tesla, say, these other companies are very real in the growth in sales and in some cases profits and cash flow. The multiples look high (especially Netflix and Amazon) but there is a reason to the market's mood.

But it is not the tech sector as a whole, it is a small group of super stocks.

2. financials. The American financial sector wrote down its problems much faster than the European, in particular, and thus earnings and stock prices have rebounded far faster (for the non nationalized companies, Citigroup appears permanently crippled).

- there's a 3rd factor. The US listed corporate sector is, net, retiring equity. In essence, companies are exploiting cheap bond finance to issue debt and buyback stock. EPS = Net Income after tax/ shares in issue, so shrinking the denominator increases EPS. History says at some point that strategy will run out of rope

Overall the US stock market has done well, very well. There's a question how much faster than the world as a whole the magic can keep growing. We have seen with GE, once the world's largest company by market cap, what happens when it goes off the rails.

US valuations are stretched but justified by the growth that has taken place, particularly by the tech and financial sectors. At some point the road of financial engineering to increase EPS may run out.

If I have a long run worry it's the paucity of the IPO market. You can see a real bubble in the value of "Unicorns" (like Uber; privately financed companies with valuations over $1 bn). And apparently the amount of funding for early stage and startup companies has gone stagnant - that's an industry that is eating its own seedcorn. Literally so because innovative startups are being bought at much earlier stages than hitherto by Google and Facebook in particular.

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

Post by fortyofforty » Sat Oct 27, 2018 7:04 am

Valuethinker wrote:
Sat Oct 27, 2018 6:07 am
ge1 wrote:
Sat Oct 27, 2018 5:50 am
I'm not advocating against investing in international stocks - but it is a reality that the continued underperformance over long periods is - at least to me - astonishing. And it's even less the underperformance (we could argue US stocks are overvalued due to recent run up in Tech etc etc), but the miserable performance in absolute terms. The Vanguard International ETF VGTSX was created in April 1996, since then the annual return including dividends has been 4.4%. And to make matters worse, it doesn't seem that international stocks are currently tremendously undervalued, from all that I'm reading it sounds like they are probably fair valued. Nor was 1996 a specific "bubble peak" which would depress returns going forward.

Reading some other posts it sounds like going back longer periods the returns would be better, but not sure how accessible international markets were back then for retail investors.
There were international mutual funds back in the early 1980s - I bought some of them. However they often came with loads, and with high Expense Ratios (I don't believe disclosure was as good in those days, either).

There's a couple of factors:

- I would need to check but appreciation of USD has been a factor I think

- International has been hit by Japan, which was c half of world stock market capitalization (?ex US? not sure) in 1989

- 2 sectors are key to US outperformance since 2008:

1. tech sector. Unlike the dot com bubble, the financial performance of the FAANGs + Microsoft is absolutely extraordinary. Apple and Google are the world's most profitable companies *ever* in terms of profits generated and underlying cash flow. Microsoft is too. (I am not sure where Google & Microsoft rank). Netflix is harder to explain, it's about valuation per subscriber in a negative cash flow model. Facebook has grown very fast. Amazon we know, it's about the rate of sales growth (and the profitability of Amazon Web Services).

Whilst it's hard to explain the value of Tesla, say, these other companies are very real in the growth in sales and in some cases profits and cash flow. The multiples look high (especially Netflix and Amazon) but there is a reason to the market's mood.

But it is not the tech sector as a whole, it is a small group of super stocks.

2. financials. The American financial sector wrote down its problems much faster than the European, in particular, and thus earnings and stock prices have rebounded far faster (for the non nationalized companies, Citigroup appears permanently crippled).

- there's a 3rd factor. The US listed corporate sector is, net, retiring equity. In essence, companies are exploiting cheap bond finance to issue debt and buyback stock. EPS = Net Income after tax/ shares in issue, so shrinking the denominator increases EPS. History says at some point that strategy will run out of rope

Overall the US stock market has done well, very well. There's a question how much faster than the world as a whole the magic can keep growing. We have seen with GE, once the world's largest company by market cap, what happens when it goes off the rails.

US valuations are stretched but justified by the growth that has taken place, particularly by the tech and financial sectors. At some point the road of financial engineering to increase EPS may run out.

If I have a long run worry it's the paucity of the IPO market. You can see a real bubble in the value of "Unicorns" (like Uber; privately financed companies with valuations over $1 bn). And apparently the amount of funding for early stage and startup companies has gone stagnant - that's an industry that is eating its own seedcorn. Literally so because innovative startups are being bought at much earlier stages than hitherto by Google and Facebook in particular.
Since these are all known unknowns, shouldn't they be priced in already?
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by BuyAndHoldOn » Sat Oct 27, 2018 7:27 am

ignition wrote:
Fri Oct 26, 2018 6:25 am
visualguy wrote:
Thu Oct 25, 2018 10:03 am
zonto wrote:
Thu Oct 25, 2018 9:15 am
Tamalak wrote:
Thu Oct 25, 2018 8:55 am
Then it's REALLY good news the entire world outside the USA has gone nowhere in 10 years. Absolute garbage :oops:
Kind of like how the U.S. market went nowhere for the 10 years comprising the 2000s. Was that absolute garbage too?
Actually, the ex-US index is only a little above what it reached in 2000, so it's 18 years of a wild ride almost nowhere other than some dividends. Returns have also been pathetic if you go back longer periods of time such as 30 years or 50 years.
According to the credit suisse yearbook 2016 Ex-US outperformed the US from 1966-2015.

^^^That is a good resource.

I believe in the international diversification benefit, but obviously it's been a choppy ride the last few years. (And that makes the current environment either a buying opportunity or proof of Intl not belonging in your portfolio :happy )

I will be interested to see if anything longer term comes from the "trade war" with China, and what that means for Portfolios (particularly emerging markets). My thought/hope is that the issues get resolved ~at least semi positively - eventually.

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

Post by visualguy » Sat Oct 27, 2018 2:27 pm

ge1 wrote:
Sat Oct 27, 2018 5:50 am
I'm not advocating against investing in international stocks - but it is a reality that the continued underperformance over long periods is - at least to me - astonishing. And it's even less the underperformance (we could argue US stocks are overvalued due to recent run up in Tech etc etc), but the miserable performance in absolute terms. The Vanguard International ETF VGTSX was created in April 1996, since then the annual return including dividends has been 4.4%. And to make matters worse, it doesn't seem that international stocks are currently tremendously undervalued, from all that I'm reading it sounds like they are probably fair valued. Nor was 1996 a specific "bubble peak" which would depress returns going forward.
I've also been surprised by how poorly ex-US has done. I gave up on it almost 20 years ago, but still didn't expect it to do this poorly. The thing that really bothers me about this situation is that it shows us that risk may very well not be rewarded with stocks even over the long term and even with a large highly-diversified investment such as the entire ex-US index.

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

Post by CULater » Sat Oct 27, 2018 3:16 pm

Try this thought experiment: If being 100% in U.S. stocks is a good idea because you have plenty of international exposure from U.S. companies, etc. then why wouldn't it be a good idea for investors in other countries to hold the same portfolio? Why should they hold any stocks in their own country, since they'd be exposed to the inferior returns of those stocks? Sure, they would be assuming the currency risk of stocks denominated in USD, but they could use currency hedged funds. Or maybe that's a benefit.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Jags4186 » Sat Oct 27, 2018 3:22 pm

I have not read all 25 pages, but what has been the effects of the strengthening dollar on performance?

I tried to find an ETF for the EAFE index dollar hedged and not hedged.

There’s DBEF, EAFE Developed Markets Dollar Hedged Index, which I compared it to EFA,EAFE Developed Markets Index. It only goes back to 2012, but the dollar hedged fund has returned 11.41% vs only 7.95% for the unhedged fund.

If and when the EU gets it’s act together and the Euro strenghtens, we could see relative outperformance of international funds.

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

Post by Valuethinker » Sat Oct 27, 2018 3:34 pm

fortyofforty wrote:
Sat Oct 27, 2018 7:04 am
Valuethinker wrote:
Sat Oct 27, 2018 6:07 am
ge1 wrote:
Sat Oct 27, 2018 5:50 am
I'm not advocating against investing in international stocks - but it is a reality that the continued underperformance over long periods is - at least to me - astonishing. And it's even less the underperformance (we could argue US stocks are overvalued due to recent run up in Tech etc etc), but the miserable performance in absolute terms. The Vanguard International ETF VGTSX was created in April 1996, since then the annual return including dividends has been 4.4%. And to make matters worse, it doesn't seem that international stocks are currently tremendously undervalued, from all that I'm reading it sounds like they are probably fair valued. Nor was 1996 a specific "bubble peak" which would depress returns going forward.

Reading some other posts it sounds like going back longer periods the returns would be better, but not sure how accessible international markets were back then for retail investors.
There were international mutual funds back in the early 1980s - I bought some of them. However they often came with loads, and with high Expense Ratios (I don't believe disclosure was as good in those days, either).

There's a couple of factors:

- I would need to check but appreciation of USD has been a factor I think

- International has been hit by Japan, which was c half of world stock market capitalization (?ex US? not sure) in 1989

- 2 sectors are key to US outperformance since 2008:

1. tech sector. Unlike the dot com bubble, the financial performance of the FAANGs + Microsoft is absolutely extraordinary. Apple and Google are the world's most profitable companies *ever* in terms of profits generated and underlying cash flow. Microsoft is too. (I am not sure where Google & Microsoft rank). Netflix is harder to explain, it's about valuation per subscriber in a negative cash flow model. Facebook has grown very fast. Amazon we know, it's about the rate of sales growth (and the profitability of Amazon Web Services).

Whilst it's hard to explain the value of Tesla, say, these other companies are very real in the growth in sales and in some cases profits and cash flow. The multiples look high (especially Netflix and Amazon) but there is a reason to the market's mood.

But it is not the tech sector as a whole, it is a small group of super stocks.

2. financials. The American financial sector wrote down its problems much faster than the European, in particular, and thus earnings and stock prices have rebounded far faster (for the non nationalized companies, Citigroup appears permanently crippled).

- there's a 3rd factor. The US listed corporate sector is, net, retiring equity. In essence, companies are exploiting cheap bond finance to issue debt and buyback stock. EPS = Net Income after tax/ shares in issue, so shrinking the denominator increases EPS. History says at some point that strategy will run out of rope

Overall the US stock market has done well, very well. There's a question how much faster than the world as a whole the magic can keep growing. We have seen with GE, once the world's largest company by market cap, what happens when it goes off the rails.

US valuations are stretched but justified by the growth that has taken place, particularly by the tech and financial sectors. At some point the road of financial engineering to increase EPS may run out.

If I have a long run worry it's the paucity of the IPO market. You can see a real bubble in the value of "Unicorns" (like Uber; privately financed companies with valuations over $1 bn). And apparently the amount of funding for early stage and startup companies has gone stagnant - that's an industry that is eating its own seedcorn. Literally so because innovative startups are being bought at much earlier stages than hitherto by Google and Facebook in particular.
Since these are all known unknowns, shouldn't they be priced in already?
Yes.

But they are the key to continued US outperformance

What has happened to the US is not anomalous but you have to take a view on it continuing.

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

Post by vitaflo » Sat Oct 27, 2018 3:40 pm

Jags4186 wrote:
Sat Oct 27, 2018 3:22 pm
I have not read all 25 pages, but what has been the effects of the strengthening dollar on performance?
Important point people often forget. Once the dollar tanks, international will do quite well in relative terms.

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

Post by visualguy » Sat Oct 27, 2018 3:45 pm

Jags4186 wrote:
Sat Oct 27, 2018 3:22 pm
I have not read all 25 pages, but what has been the effects of the strengthening dollar on performance?

I tried to find an ETF for the EAFE index dollar hedged and not hedged.

There’s DBEF, EAFE Developed Markets Dollar Hedged Index, which I compared it to EFA,EAFE Developed Markets Index. It only goes back to 2012, but the dollar hedged fund has returned 11.41% vs only 7.95% for the unhedged fund.

If and when the EU gets it’s act together and the Euro strenghtens, we could see relative outperformance of international funds.
This has been studied. In the recent past, hedging the dollar provided better returns, but in the long run the returns were actually even a bit worse with hedging than without.

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

Post by ge1 » Sat Oct 27, 2018 3:45 pm

@ Valuethinker, good points but I'm less interested in why US outperformed and more why the international absolute returns have been so weak. You hit the nail on the head though with Japan...

I had nothing better to do the last hour :D and ran the numbers:

- I'm using Japan, UK, France, Germany, Switzerland, Canada, Australia and South Korea as a proxy for Total International. They currently are approximately 2/3 of the Intl index. 22 years ago it would have been significantly higher due to the terrible performance of Japan over the period
- I have no access to dividend data, so I'm using price changes only in the respective indices
- Using those 8 countries, the average annual growth since May 1996 was 4.1%. This compares with 6.5% for the S&P.
- If I weigh however the growth rates for each country, the annual growth rate drops to 2.0%! Japan's annual growth rate was exactly 0.1% and of those 8 countries, 22 years ago Japan made up 53% while today it makes up 28%.
- The average (unweighted) excluding Japan is 4.7%, which is still 1.8% lower than the US.
- Adding back assumed dividend yield of 2.5% gets me very close to the total return of international stocks for US investor of 4.4% I mentioned earlier, so the math works out.

FX did not have a big impact. Yen, Euro and GBP all weakened vs USD, but not to a large extent (between 5% and 16%). We also have to be careful with currency impacts as presumably most of the multinational companies in the Intl Index have a large exposure from USD, so a stronger USD will translate into stronger earnings for them.

It's not only Japan though. Ex Japan the difference was (-1.8%) - if your growth is 1.8% less over 22 years, you end up with 36% less than the other guy...

Why the other countries underperformed is a question for somebody smarter than me. The main culprit outside Japan is the UK - Valuethinker may have some insight into that. I do think that the European Banks are probably one of main drivers; I have worked in that industry for a long time and as others have pointed out virtually every large European Bank has permanently lost / destroyed 70-80% of its market cap in the Financial Crisis. (Which is somewhat ironic given that the cause of the crises were US subprime mortgages, but I digress :D )

Enjoy the weekend everybody.
Last edited by ge1 on Sat Oct 27, 2018 3:47 pm, 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 visualguy » Sat Oct 27, 2018 3:47 pm

vitaflo wrote:
Sat Oct 27, 2018 3:40 pm
Jags4186 wrote:
Sat Oct 27, 2018 3:22 pm
I have not read all 25 pages, but what has been the effects of the strengthening dollar on performance?
Important point people often forget. Once the dollar tanks, international will do quite well in relative terms.
Maybe for a while, but not in the long run based on past experience.

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

Post by drk » Sat Oct 27, 2018 3:55 pm

If we're repeating the past, I'm excited to see how the world wide web turns out next time around.

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

Post by jeffyscott » Sat Oct 27, 2018 4:37 pm

visualguy wrote:
Sat Oct 27, 2018 2:27 pm
The thing that really bothers me about this situation is that it shows us that risk may very well not be rewarded with stocks even over the long term and even with a large highly-diversified investment such as the entire ex-US index.
Well, of course, taking risk is not guaranteed to be rewarded or it would not truly be a risk.

But at least we know that the highly-diversified investment of US stocks is not truly risky in that way, like those rotten foreign stocks.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by visualguy » Sat Oct 27, 2018 4:48 pm

jeffyscott wrote:
Sat Oct 27, 2018 4:37 pm
visualguy wrote:
Sat Oct 27, 2018 2:27 pm
The thing that really bothers me about this situation is that it shows us that risk may very well not be rewarded with stocks even over the long term and even with a large highly-diversified investment such as the entire ex-US index.
Well, of course, taking risk is not guaranteed to be rewarded or it would not truly be a risk.

But at least we know that the highly-diversified investment of US stocks is not truly risky in that way, like those rotten foreign stocks.
That's exactly my fear - that we'll see something similar happening to US stocks, and risk will not be rewarded even over the long run for either one of them. I gave up on ex-US long ago (thankfully), but I do still hold hope for continued US stock indexing success over the next few decades. That may not happen, though, so I diversify to direct real estate. Not much else I can do at my level of resources. Folks with a lot more wealth have some additional options.

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

Post by MJW » Sun Oct 28, 2018 12:34 am

Well, with any luck maybe after another 20 years Total International will actually deliver better returns than a junk bond fund. I guess I can hope.

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

Post by raven15 » Sun Oct 28, 2018 2:50 am

kosomoto wrote:
Thu Oct 25, 2018 10:53 pm
The US has never had a long run period of 30 years or more with lower than 6% annualized. International stocks have gone lower than 5%. There is honestly something fundamentally wrong with non US stocks as a whole but I don’t know what.
BeeebooooBeeebooooBeeeboooo
As Bill Bernstein might say, consider yourself pulled over by the backtesting police.
https://dqydj.com/investments-and-returns/ <--- useful tool

The S&P500 has returned less than 6% nominal in 3.35% of all 40 year periods. So yes it has definitely done so in 30 year periods.

Adjust for inflation and it has returned less than 6% in 43.71% of all 40 year periods.

Oh and there have also been 0.08% of 40 year periods where the S&P500 returned less than 5% nominal.

I bet you would have said the same thing about US stocks during those periods.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by selters » Sun Oct 28, 2018 3:02 am

visualguy wrote:
Thu Oct 25, 2018 10:38 pm
CULater wrote:
Thu Oct 25, 2018 10:17 pm
It's just that comparing current price of VGTSX to the price in 2000 doesn't tell you much about compounded returns with dividends reinvested, which turns out to have been 91% which is not really "going nowhere" since 2000. Besides, it's misleading because VGTSX delivered similar returns to U.S. stocks until 2013. And since then, it's not that the returns of VGTSX have been so miserable (compound annual return of 5.5%) as much as the fact that U.S. returns have been crazy high (compound annual return of 15.3%). Will that continue, do you think?
In terms of the future... I think the poor performance of ex-US will continue.
Isn't that a case for active management? If it is most likely that US stocks will outperform over the next 10-20-30 years, shouldn't US valuations be higher, or ex-US valuations be lower (or some combination of the two)?

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

Post by UKFred » Sun Oct 28, 2018 4:24 am

ge1 wrote:
Sat Oct 27, 2018 3:45 pm

- Adding back assumed dividend yield of 2.5% gets me very close to the total return of international stocks for US investor of 4.4% I mentioned earlier, so the math works out.

.... The main culprit outside Japan is the UK - Valuethinker may have some insight into that. I do think that the European Banks are probably one of main drivers; I have worked in that industry for a long time and as others have pointed out virtually every large European Bank has permanently lost / destroyed 70-80% of its market cap in the Financial Crisis. (Which is somewhat ironic given that the cause of the crises were US subprime mortgages, but I digress :D )

Enjoy the weekend everybody.
The UK yield is higher than the US yield. Earlier this year, the FTSE 100 yield passed 4%. So the UK total return compared to the US is not that much less (having said that, Brexit has taken a toll in the last eighteen months and shows what kind of idiosyncratic risks can show up when you invest totally in one country and is an argument for international diversification).
http://www.morningstar.co.uk/uk/news/16 ... es-4.aspx/

I do think the US stock market has outperformed ex-US and I think it is for two main reasons. The first is that the US has a very strong tech sector and that has been on a tear over the last few years. Secondly, the US financial industry recovered faster than the European one after the financial crisis (as ge1 points out).

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

Post by selters » Sun Oct 28, 2018 5:28 am

CULater wrote:
Thu Oct 25, 2018 7:02 pm
You're both wrong. Global ex-US has returned 91% since the beginning of 2000 (not 191%), or an annualized 3.51% compounded return.
I'm pretty sure you're using returns from a net return index or returns from an actual fund, which subtracts foreign withholding taxes and the expense ratio from the fund's returns.

The higher expense ratio and the non-reclaimable foreign withholding taxes is of course a good reason for a US investor to underweight ex-US stocks.

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

Post by Ron Scott » Sun Oct 28, 2018 6:46 am

I never considered myself patriotic and I’m as big a critic of our society and politics as the average Joe. But I’ve always been impressed with America’s ingenuity, unparalleled cultural diversity, and comparatively business-friendly environment. And our consistent attitude toward failure—judging risk-takers not by how often they fail but by how often they get back up—is a defining characteristic, testament to our belief in the human spirit. This place clearly makes sense from an investment perspective.

I don’t know enough about the business environments in other countries to actually invest in them and I treat most investment advice in the news and from brokerages as noise. So I’m US only and quite happy.

I wish the best to those who invest internationally.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Valuethinker » Sun Oct 28, 2018 7:44 am

Ron Scott wrote:
Sun Oct 28, 2018 6:46 am
I never considered myself patriotic and I’m as big a critic of our society and politics as the average Joe. But I’ve always been impressed with America’s ingenuity, unparalleled cultural diversity, and comparatively business-friendly environment. And our consistent attitude toward failure—judging risk-takers not by how often they fail but by how often they get back up—is a defining characteristic, testament to our belief in the human spirit. This place clearly makes sense from an investment perspective.
You lost me at "unparalleled cultural diversity" ? It's hard to imagine a country as big as the USA (and culturally, English Canada is distinct but not that distinct -- I'd argue the old south is probably culturally and politically more distinct) where the same things are on sale in the stores, the same stores & restaurants are everywhere, the suburbs look so much alike (and so little local adaptation to the local conditions- I mean people have green lawns in Colorado, Arizona & California?), everybody speaks the same language with accents that are very similar, same political system, same basic beliefs, same road signs, etc. etc. The differences in regional dialect are so miniscule that there's actually a website where you can test them (it thinks I come from somewhere in Michigan and from Rochester NY; so yes it's "pop" not "soda" ;-)).

Perhaps you have not travelled much outside the USA? Believe me, compared to Europe, or any place I have been other than Mainland China (which does have distinct differences but I think the nuances get lost, and also the CPC & Beijing have tended to homogenize as a deliberate policy, eg the government of Hong Kong now speaks Mandarin not Cantonese) America is very homogeneous.

Did you perhaps mean geographic diversity? The US has a lot of different terrain and climate zones, although I would argue that east of the Mississippi it's all cold and snowy winters and hot and humid summers - just degrees of same. If you are in Atlanta in March and you fly up to Boston or Chicago, you might not agree with me ;-). Again, a lot of USA is very flat-- I grew up on the post glacial morraines -- but then there are the Rockies.

Don't disagree with the other parts although it's not always, everywhere, the case in the USA. The USA is not just Silicon Valley. If you want an innovative startup culture, Stockholm is pretty impressive.
I don’t know enough about the business environments in other countries to actually invest in them and I treat most investment advice in the news and from brokerages as noise. So I’m US only and quite happy.

I wish the best to those who invest internationally.
There's an issue here about confusing familiarity with making good or bad investment decisions. One example of this is investing in the home town HQ'd company because you know the company and its reputation. Great idea if it is Berkshire Hathaway, bad idea if it is US Steel.

Another opposite form is "I don't invest there, because I don't know it". For example, I might not invest in Apple because I never use their products (and find it frustrating when I do). That would also be an investment error.

I am always fascinated by what causes Home Country Bias, because it's a big area of research in the finance literature, and it's a major flaw for those of us who don't live in the USA.

In the context of the Efficient Market that we preach here, it's fair to say (for a US investor):

- International diversification makes a miniscule difference in the long run to risk and return (sub periods it's been sharply different, but say over 40-50 years)

- it might cost more particularly if there are unrecoverable dividend withholding taxes (international markets tend to have higher dividend yields than USA)

- currency volatility might simply add volatility without adding to return

Believing that US stocks have some inherent advantage around corporate management and regulation, and that the market does not price this in, is really believing that Efficient Markets don't hold.
Last edited by Valuethinker on Sun Oct 28, 2018 8:27 am, edited 2 times 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 Ron Scott » Sun Oct 28, 2018 8:04 am

Valuethinker wrote:
Sun Oct 28, 2018 7:44 am
Ron Scott wrote:
Sun Oct 28, 2018 6:46 am
I never considered myself patriotic and I’m as big a critic of our society and politics as the average Joe. But I’ve always been impressed with America’s ingenuity, unparalleled cultural diversity, and comparatively business-friendly environment. And our consistent attitude toward failure—judging risk-takers not by how often they fail but by how often they get back up—is a defining characteristic, testament to our belief in the human spirit. This place clearly makes sense from an investment perspective.
You lost me at "unparalleled cultural diversity" ? It's hard to imagine a country as big as the USA (and culturally, English Canada is distinct but not that distinct -- I'd argue the old south is probably culturally and politically more distinct) where the same things are on sale in the stores, the same stores & restaurants are everywhere, the suburbs look so much alike (and so little local adaptation to the local conditions- I mean people have green lawns in Colorado, Arizona & California?), everybody speaks the same language with accents that are very similar, same political system, same basic beliefs, same road signs, etc. etc. The differences in regional dialect are so miniscule that there's actually a website where you can test them (it thinks I come from somewhere in Michigan and from Rochester NY; so yes it's "pop" not "soda" ;-)).

Perhaps you have not travelled much outside the USA? Believe me, compared to Europe, or any place I have been other than Mainland China (which does have distinct differences but I think the nuances get lost, and also the CPC & Beijing have tended to homogenize as a deliberate policy, eg the government of Hong Kong now speaks Mandarin not Cantonese) America is very homogeneous.

Don't disagree with the other parts although it's not always, everywhere, the case in the USA. The USA is not just Silicon Valley. If you want an innovative startup culture, Stockholm is pretty impressive.
I don’t know enough about the business environments in other countries to actually invest in them and I treat most investment advice in the news and from brokerages as noise. So I’m US only and quite happy.

I wish the best to those who invest internationally.
There's an issue here about confusing familiarity with making good or bad investment decisions. One example of this is investing in the home town HQ'd company because you know the company and its reputation. Great idea if it is Berkshire Hathaway, bad idea if it is US Steel.

Another opposite form is "I don't invest there, because I don't know it". For example, I might not invest in Apple because I never use their products (and find it frustrating when I do). That would also be an investment error.

I am always fascinated by what causes Home Country Bias, because it's a big area of research in the finance literature, and it's a major flaw for those of us who don't live in the USA.

In the context of the Efficient Market that we preach here, it's fair to say (for a US investor):

- International diversification makes a miniscule difference in the long run to risk and return (sub periods it's been sharply different, but say over 40-50 years)

- it might cost more particularly if there are unrecoverable dividend withholding taxes (international markets tend to have higher dividend yields than USA)

- currency volatility might simply add volatility without adding to return

Believing that US stocks have some inherent advantage around corporate management and regulation, and that the market does not price this in, is really believing that Efficient Markets don't hold.
Bravo.

Do you understand the meaning of Shakespeare's line "The lady doth protest too much methinks." or are you content with the knowledge that it is written in iambic pentameter?
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by LadyGeek » Sun Oct 28, 2018 8:06 am

^^^ The "lady" doth declares to stay on-topic.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by fortyofforty » Sun Oct 28, 2018 10:02 am

I am less concerned about underperformance of ex-U.S. equities than I am about underperformance combined with high correlation with U.S. equities. There are certainly plenty of opinions regarding correlation, as a quick internet search will reveal, and I am not sure where the truth lies. Underperformance combined with high correlation would be the worst of both worlds. However, I remain hopeful that a dose of international will provide some benefit, or, at worst, not cost me too much, in terms of long-term performance. All's well that ends well.
Last edited by fortyofforty on Sun Oct 28, 2018 3:28 pm, 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 columbia » Sun Oct 28, 2018 10:08 am

LadyGeek wrote:
Sun Oct 28, 2018 8:06 am
^^^ The "lady" doth declares to stay on-topic.
I suppose you could have exacted a pound of flesh. :)

columbia
Posts: 1729
Joined: Tue Aug 27, 2013 5:30 am

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

Post by columbia » Tue Oct 30, 2018 7:39 pm

Is Chinese capitalism in crisis, as stock market rout drives private companies into the state’s arms?
At least 32 companies listed on the Shanghai and Shenzhen bourses sold controlling stakes to the Chinese state as of October 17, six of them to the central government, while 26 were taken over by provincial or city-level agencies, according to data by Shanghai Wind and China International Capital Corporation (CICC).
https://m.scmp.com/business/companies/a ... es-private

HEDGEFUNDIE
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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 Oct 30, 2018 8:13 pm

fortyofforty wrote:
Sun Oct 28, 2018 10:02 am
I am less concerned about underperformance of ex-U.S. equities than I am about underperformance combined with high correlation with U.S. equities. There are certainly plenty of opinions regarding correlation, as a quick internet search will reveal, and I am not sure where the truth lies. Underperformance combined with high correlation would be the worst of both worlds. However, I remain hopeful that a dose of international will provide some benefit, or, at worst, not cost me too much, in terms of long-term performance. All's well that ends well.
+1.

This is exactly the reason why my International allocation is 100% small caps, ISCF and DGS.

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

Post by finite_difference » Tue Oct 30, 2018 8:24 pm

columbia wrote:
Tue Oct 30, 2018 7:39 pm
Is Chinese capitalism in crisis, as stock market rout drives private companies into the state’s arms?
At least 32 companies listed on the Shanghai and Shenzhen bourses sold controlling stakes to the Chinese state as of October 17, six of them to the central government, while 26 were taken over by provincial or city-level agencies, according to data by Shanghai Wind and China International Capital Corporation (CICC).
https://m.scmp.com/business/companies/a ... es-private
32 out of 2600+? When the US has bailouts is our capitalism in crisis?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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

Post by LadyGeek » Tue Oct 30, 2018 9:18 pm

This thread has run its course and is locked (derailed). See: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
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