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

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

Post by bligh » Thu Aug 16, 2018 6:34 pm

9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer

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

Post by permport » Thu Aug 16, 2018 6:37 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
Good question to ask.

For me, nope. You'll have to pry my international holdings from my cold, dead hands.
Buy right and hold tight.

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

Post by willthrill81 » Thu Aug 16, 2018 6:38 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
"Even when you win an argument on the Internet, you're still a loser."

:D
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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

Post by permport » Thu Aug 16, 2018 6:38 pm

willthrill81 wrote:
Thu Aug 16, 2018 6:38 pm
bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
"Even when you win an argument on the Internet, you're still a loser."

:D
no u

:wink:
Buy right and hold tight.

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

Post by MJW » Thu Aug 16, 2018 6:40 pm

permport wrote:
Thu Aug 16, 2018 6:06 pm
MJW wrote:
Thu Aug 16, 2018 4:58 pm
permport wrote:
Thu Aug 16, 2018 3:36 pm
Exactly. An extended period of outperformance by U.S... should we expect that in the future? Is past prologue? Reversion to the mean strongly suggests this will not continue indefinitely.
What mean are we talking about here, exactly?
I meant 'mean' as in being callous or rude, obviously. :D
“And don’t call me Shirley.”

Reversion to the mean is cited frequently on this forum and more often than not it seems to be referenced in the abstract, as if it’s more an idea of a pendulum swinging the opposite direction than a real, operative number to work with.

I just wonder what the mean actually is in this case, and would it really make a dramatic difference?

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

Post by cj2018 » Thu Aug 16, 2018 6:41 pm

permport wrote:
Thu Aug 16, 2018 6:37 pm
bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
Good question to ask.

For me, nope. You'll have to pry my international holdings from my cold, dead hands.
Yes, I have changed my mindset about why having international is key to having a broadly diversified portfolio if you want to protect and preserve your wealth over long periods of time.

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

Post by ThriftyPhD » Thu Aug 16, 2018 6:54 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
I haven't changed my opinion, but I have thought about WHY I have that opinion and reconfirmed my expectations and goals for my international choice.

It's always good to reexamine your position when presented with divergent thoughts.

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

Post by MJW » Thu Aug 16, 2018 7:00 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
I don't think it's changed my conviction (or lack thereof) in either direction, but it raises a few interesting questions.

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

Post by jibantik » Thu Aug 16, 2018 7:27 pm

visualguy wrote:
Thu Aug 16, 2018 1:42 pm
columbia wrote:
Thu Aug 16, 2018 1:15 pm
So now one of the arguments for international is that the US dollar might collapse, while the rest of the world hums along....surely no one actually believes that.
Folks are working hard to find some reason to hold ex-US... The normal Boglehead argument that it does well if you keep it for the long run can't be used after the poor performance over the last 30 years.
Wait... back up, beep beep beep. You realize that holding market weight is the default position. It takes no work to justify holding it, that is the entire point.

You are claiming a different strategy so the burden of proof is on you. Your argument is based on past performance, which is an EXTREMELY weak argument. Not enough to convince me to switch strategies. IIRC you also do quite a bit of cherry picking to make your points.

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

Post by columbia » Thu Aug 16, 2018 7:30 pm

It’s convinced me that people with different investment timelines do and should have different opinions on this particular subject. I wouldn’t hesitate to have VT as my line stock holding, if I were 30.


I am most certainly not 30.

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

Post by Tycoon » Thu Aug 16, 2018 8:30 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
Since you asked. Me? I didn't become a multi-millionaire following the advice of anonymous internet prognosticators. I'll continue to dance with the one that brought me.
Appeal to Pity:When pity is envoked to support a statement | Appeal to Popular Sentiment:Appealing to unrelated prejudices and attitudes | Hasty Generalization:Too little evidence to support the conclusion

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

Post by willthrill81 » Thu Aug 16, 2018 8:31 pm

jibantik wrote:
Thu Aug 16, 2018 7:27 pm
visualguy wrote:
Thu Aug 16, 2018 1:42 pm
columbia wrote:
Thu Aug 16, 2018 1:15 pm
So now one of the arguments for international is that the US dollar might collapse, while the rest of the world hums along....surely no one actually believes that.
Folks are working hard to find some reason to hold ex-US... The normal Boglehead argument that it does well if you keep it for the long run can't be used after the poor performance over the last 30 years.
Wait... back up, beep beep beep. You realize that holding market weight is the default position. It takes no work to justify holding it, that is the entire point.

You are claiming a different strategy so the burden of proof is on you. Your argument is based on past performance, which is an EXTREMELY weak argument. Not enough to convince me to switch strategies. IIRC you also do quite a bit of cherry picking to make your points.
Actually, the 'default position' is a market cap weighting of the world's stocks, bonds, real estate, cryptocurrency, etc. I doubt that anyone holds such a position.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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

Post by PhilosophyAndrew » Thu Aug 16, 2018 8:38 pm

OP, if you have made a principled and permanent decision to forego the extra equity diversity you could secure by investing in internatanl equities, that is perfectly fine.

If, contrary to expectations, domestic equities lag international equities for a future 10-year period, will you change your mind to try to chase that performance? If so, that would constitute a behavioral mistake of selling low-priced asset class(es) to purchase a high-priced asset. I assume that you would not make that mistake, but if bThanks it is worth pointing out the dangers of behaving in that way.

If others wish to maximize equitiy diversification by adding international equities to their portfolio, that’s is perfectly fine as long as they too refrain from changing heir minds in order ti chase performance.

Avoiding that behavioral mistake is one of the reasons why the Boglehead refrain “stay the course” is so valieslvr to investors. None of us should mumble those important words: we should assert them with confidence and passion!

There are good reasons for changing one’s asset allocations, but I submit that the relative performance of the various asset classes is not generally a good reason. I would suggest, instead, that folks focus on whether they wish to diversify beyond the domestic equity market and then plan and act accordingly.

Personally, I decided to “buy the world” with a roughly 50/50 domestic/international division among my
equities. However, it is reasonable to settle on a different international allocation, including a 0% allocation. To modify one’s allocations to chase performance ould be a dangerous folly, and I hope that your discussion of performance doesn’t lead anyone to make that mistake.

Andy.

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

Post by Soon2BXProgrammer » Thu Aug 16, 2018 8:42 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer

Yes, this thread made me take action. i logged into my account that i don't check all that often, and realized, i could click the re-balance button and buy INTL. Thanks for the reminder.

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

Post by fennewaldaj » Thu Aug 16, 2018 9:12 pm

willthrill81 wrote:
Thu Aug 16, 2018 5:36 pm
fennewaldaj wrote:
Thu Aug 16, 2018 5:30 pm
willthrill81 wrote:
Thu Aug 16, 2018 5:22 pm
Riley15 wrote:
Thu Aug 16, 2018 5:18 pm
willthrill81 wrote:
Thu Aug 16, 2018 4:13 pm


Then why have risk adjusted returns for U.S. equities been dramatically higher than international equities for 30 years and counting?

Home country bias is very present among the world's investors. Fins tend to invest in Finland, South Africans in South Africa, etc. Opportunities in one nation are often not taken advantage of by investors in other nations. The EMH doesn't account for this, and it could well be part of the reason for international's cumulative underperformance compared to the U.S.

Americans actually invest more in international than do most investors in other nations, despite U.S. equities representing half of the global market.

If we assumed for a moment that the EMH was false, I wonder how many would still be beating the global market cap drum.

International market funds just as US market funds are based on market cap and most are dominated by Large Global companies with huge export businesses. A good portion of US earnings come from outside the country and vice versa for other Global companies. To limit your investment to just a select few that happen to be based in US is silly.

We have made great progress in transport and by Sea and Air in the past century of both of goods and people. This combined with the Internet has made Borders meaningless to business. Globalization is real and it's not going back whether we like it or not.
Actually, the increasingly global aspect of major economies could, arguably, make international investing less attractive because it means that U.S. and international markets would be more strongly correlated with each other than they were in the past. We may now be in a world where all of the equity markets by and large sink or swim together. That was certainly the case in the 2008-2009 debacle.
right but the high correlation of US and international since 2009 with fairly different results indicates we should not expect exactly the same performance even with high correlation. We could repeat the relative performance of the last 30 years between the two or positions could be reversed. They could still have high correlations through all of this.
But the point is that if U.S. and international markets are strongly correlated, a downturn in the U.S. could easily lead to a downturn in international stocks as well (keeping in mind that correlation does not necessarily equal causation). If that's the case, you might not benefit from holding international at all.
Yeah I mean I get that its not going to help me in the short term. My point was in the long run it will help me get more average results. I know one half will perform better than the other but I don't know which half before the fact. I see no need to try to guess when I can just own both for similar cost. If I had a reason to expect one side to do better than the other I might go 2/3, 1/3 but I don't see much reason to go past that.

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

Post by lostdog » Thu Aug 16, 2018 9:20 pm

columbia wrote:
Thu Aug 16, 2018 7:30 pm
It’s convinced me that people with different investment timelines do and should have different opinions on this particular subject. I wouldn’t hesitate to have VT as my line stock holding, if I were 30.


I am most certainly not 30.
Why does age make a difference in holding international equities?
Hear the clock ticking? That’s your life flying by while you listen to market pundits and watch stock prices fluctuate. -Humble Dollar

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

Post by drk » Thu Aug 16, 2018 9:25 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
I'm surprised that the mods have let this thread go on for this long, but maybe it serves as a honey pot for people inclined to engage in this perennially pointless debate (if one can really call it that).

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

Post by GreatOdinsRaven » Thu Aug 16, 2018 9:27 pm

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.

I know that I don’t know what the future holds. I also have a 40-50 year investing timeline (hopefully). Therefore, I diversify.

“Diversification is your buddy” -David Booth
"The greatest enemies of the equity investor are expenses and emotions." -John C. Bogle, Little Book of Common Sense Investing. | | "Winter is coming." Lord Eddard Stark.

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

Post by UpperNwGuy » Thu Aug 16, 2018 9:49 pm

lostdog wrote:
Thu Aug 16, 2018 9:20 pm
columbia wrote:
Thu Aug 16, 2018 7:30 pm
It’s convinced me that people with different investment timelines do and should have different opinions on this particular subject. I wouldn’t hesitate to have VT as my line stock holding, if I were 30.


I am most certainly not 30.
Why does age make a difference in holding international equities?
Because for those of us who are old, our time horizon probably isn't long enough to see the international markets recover from their current struggles.

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

Post by zonto » Thu Aug 16, 2018 9:53 pm

“Diversification is about accepting good enough while missing out on great but avoiding terrible.” - Ben Carlson

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

Post by oldzey » Thu Aug 16, 2018 10:07 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
I'm with Jack Bogle (I don't use International, like him).

However, Jack says that if you have to have International investments, to limit them to no more than 20% of your portfolio.

After reading this thread, my belief is that 10% is a more reasonable amount, if you absolutely have to have International investments.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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

Post by KlangFool » Thu Aug 16, 2018 10:09 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
bligh,

1) I did not change my position.

2) But, this thread helps me to take a look at my International stock position in order to look for TLH opportunity.

KlangFool

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

Post by rgs92 » Thu Aug 16, 2018 10:15 pm

Is the headline here "The Death of Foreign Equities"?
(Mirroring the famous August 13, 1979 Business Week headline about 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 aj76er » Thu Aug 16, 2018 11:06 pm

vitaflo wrote:
Thu Aug 16, 2018 5:27 pm
A while back someone posted research of safe withdrawal rates of different countries (invested 100% in said country). Then compared it to world cap-weighted portfolio.
https://finpage.blog/2017/03/18/investi ... ld-part-1/
https://finpage.blog/2017/03/25/investi ... ld-part-2/
https://finpage.blog/2017/03/25/investi ... ld-part-3/

Overall conclusion from the author:
Instead of overly relying on the past history of the country we live in, we should try to open our minds to what happened to the rest of the world and learn from it. One could always argue if one specific comparison is significant or not, or if a coarse rule of thumb (e.g. 75% global) applies in every case, but at least, this represents a solid foundation of real-life facts and history to reflect upon. The author believes that this study makes a convincing case to seek a fairly high exposure to global (or international) equities, while keeping a significant tilt towards domestic equities. Some readers might perceive otherwise, but should at least have more factual material to refine their thinking and possibly question their home country bias.
FWIW, reading the above articles re-framed my thinking about international investing. I had always kept about 30% in international, but I now think of the allocation as 67% World + 33% U.S., which works out to be ~30% international. The nice thing about thinking in terms of World+U.S. (where World Includes U.S.), is that one's portfolio will track global macro growth trends, which may not mean revert over one's investing horizon (or ever?).

Taking another perspective, it does seem that the countries with the best returns and SWR for domestic only were those that had relatively stable and strong currencies. Japan is the exception, but it had a huge speculative growth bubble that popped, so fairly explainable there. So anyway, for the domestic-only crowd, I suspect that it will turn out okay if the dollar remains relatively strong and stable and you keep an eye on valuations.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

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

Post by HuckFinn » Fri Aug 17, 2018 12:33 am

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
Hi Bligh,

A few observations from the Original poster,

1) There is sufficient factual data in these posts to conclude that International investing has not been necessary in our lifetime and may never be.

2) There is also sufficient factual data in these posts to conclude that International investing can be beneficial in maintaining the most all-weather portfolio going forward - especially given the very large valuation gap between domestic and foreign funds right now.

Ongoing concern: - The original post described a scenario where an investor with a purely domestic $ 2 million balanced portfolio (65% Stock/35% bond) would have outperformed the investor who followed Vanguards 40% INTL equity recommendation by $710,762. Performance chasing is not the major issue at hand to me. As other posters have noted Internationals lagging is not a recent phenomenon but over twenty years. If ten years from now we repeat this exercise and see a similar outcome is it time to change our recommendations? More specifically, I still strongly question Vanguards Target Date and Life Strategy funds pouring billions of investor money overseas by locking into the 40% number and Vanguards continual International recommendations. Though some posters have made great points our concerns linger that Vanguards actions and recommendations ill suit US investors to the benefit of our foreign counterparts.
Physicians bled patients for thousand of years before realizing it was doing more hard then good. 20+ years of inferior International performance... At what point does our own script change about International? If it lags for 30 years, 40 years? Never...?

Action we have taken after posting and reading through the responses:

1) Over the last 15 years our International percentage of our equities has slowly decreased from about 40% to 20% as of January 1st this year. In the beginning of the year we committed to 20% being our International equity percentage. We drifted off course and began dumping more International bringing it down to as low as 14% a few weeks ago. Yesterday we decided to add the 6% back into Internationals and go back to our original 20%

The reasons we reversed course and restored our 20% International position:

A) Taylor's reminder about "Staying the Course". Taylor was instrumental in our families portfolio construction and despite the title of this post that mantra has served us well. We don't want to muck things up.

B) We require a portfolio that is pretty weather proof even at the expense of performance (within reason..) I have an intuition that the US will continue to outperform foreign equities unless there are major changes in our economic system. But.. I'm often wrong frequently enough to hedge my bets.

C) Presently the Total US Stock Index Fund has outperformed it's International sibling by 13.49% year to date. Despite my long term conviction that International is inferior I can't help but see the higher valuations for the US and perhaps opportunity and concern. Call this market timing, I know...

To avoid market timing behavior we are also committing to 3 years making no change on the 20% to avoid making rash decisions.

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

Post by MossySF » Fri Aug 17, 2018 12:50 am

First, the "disaster" word is totally overblown. Investing in MoviePass has been a disaster. I just read an article in Quartz about how people bought $250K worth of MoviePass' parent company based on "analyst buy positions" and now their stock is worth $500. THAT IS A DISASTER!

For Bogleheads, getting 6% instead of 9% in a subclass -- we probably wouldn't even have noticed it much to be honest because (1) the crazy high savings rates here and (2) if you were doing international for diversification, you probably were also slicing+dicing where some stuff was bringing you down but other stuff was pushing you up. In other words, if you had a complex AA where your overweight REIT percentage gave you outsized returns -- it would be disingenuous to just point out the sub-slices that underperformed because THAT'S WHAT DIVERSIFICATION DOES!

Second, it is OK to be 100% US. The US is a big enough market where you can "probably" get away with it. Your odds of a 20yr Japan stock market depression scenario are low. But if INTL does outperform in the future, absolutely do not even think about changing your mind -- because at that point, all you're doing is performance changing -- buy high and selling low (relatively).

I personally was 0% international back in 2009 because I sold as much as possible to dump everything in the sector that was an absolute "disaster" at that time .. REIT. And after 8 years of outperformance, I'm back to a market percentage for REITs and now incrementally moving money in the the sector that has been an absolute "disaster" most recently -- INTL. I use a plan that overbalances towards the major index sectors that have done the worse in recent history -- to be honest, it's probably not much of a difference because my savings rate goes up faster than my returns but it "feels" better to buy at relative discounts.

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Re: It's not enough to mumble "Stay the Course" ??

Post by dual » Fri Aug 17, 2018 1:31 am

Taylor Larimore wrote:
Wed Aug 15, 2018 8:11 pm
"Stay the course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you." -- Jack Bogle in "Common Sense on Mutual Funds" (underline mine)

Enough said.

Best wishes.
Taylor
I am not sure what you mean by this. Mr. Bogle is famous for saying US investors do NOT need to invest in international stocks. Is that the course we should stick to?

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

Post by greenhill » Fri Aug 17, 2018 2:09 am

If holding INTL increases your ability to stay the course, then hold it. If holding INTL reduces your ability to stay the course, then don't hold it.

My home country is basically an emerging market. I feel awkward to hold US only just because it performed better in the past. If I invest in VTI only but VTI underperforms VT, I will probably regret about not sticking with market cap allocation. If I invest in VT but VT underperforms VTI (the case right now), I'm fine with it. In fact, even VXUS alone outperformed my home country for the last 10 years, so I'm very glad that I invested in both US and INTL.

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Re: It's not enough to mumble "Stay the Course" ??

Post by Elysium » Fri Aug 17, 2018 6:34 am

dual wrote:
Fri Aug 17, 2018 1:31 am
Taylor Larimore wrote:
Wed Aug 15, 2018 8:11 pm
"Stay the course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you." -- Jack Bogle in "Common Sense on Mutual Funds" (underline mine)

Enough said.

Best wishes.
Taylor
I am not sure what you mean by this. Mr. Bogle is famous for saying US investors do NOT need to invest in international stocks. Is that the course we should stick to?
It's pretty evident what he meant, see the highlight. Stay the course means, stay the couse you have selected, not someone else has selected, or change whenever we read something on the internet. Investors who follow their emotions and change AA tends to earn less than what they would by staying the course. If you read the evidence presented by Bogle and convinced you don't need INTL then that is your course, or if you came on the side of investing whatever allocation you thought is reasonable for your situation then that is your course. Now, stay with it.

OP here has not stayed the course as per his own admission has been tinkering with US / INTL allocation over last 15 years, selling low and buying high. This is the exact opposite of stay the course. This thread has me even more convinced my INTL allocation would stay where it is. If I were to lower it at any point, then that would be when INTL has outperformed US cumulatively.

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

Post by snackdog » Fri Aug 17, 2018 7:22 am

I guess any sector which underperforms for a while is subject to rants from people who held it, lost and want to sell and buy some other sector which has been done well over the same period. I guess the same people read the Morningstar reports and buy the best performing mutual fund from last year. It is a strategy.

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

Post by lostdog » Fri Aug 17, 2018 7:47 am

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
It hasn't changed my opinion. I am glad for this thread because it exposed us to human emotion and how the OP is trying to convince us all that recency and home bias is an OK thing to do while at the same time he was buying high and selling low.

Kind of like exposure therapy of what not to do. Then we see justification, "we told you so" and virtual high fives from U.S. only investors using the same old tiresome excuses of home bias is OK because Jack and Warren said so. Then displaying a past performance chart proving it and then bolding the sentence: "past performance is not an indication for future performance", which contradicts their strategy.

I admit to knowing absolutely nothing so I just buy the haystack.
Hear the clock ticking? That’s your life flying by while you listen to market pundits and watch stock prices fluctuate. -Humble Dollar

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

Post by Valuethinker » Fri Aug 17, 2018 8:20 am

rgs92 wrote:
Thu Aug 16, 2018 10:15 pm
Is the headline here "The Death of Foreign Equities"?
(Mirroring the famous August 13, 1979 Business Week headline about US stocks.)
As long as the super cap tech cos are in the ascendant (Apple, Amazon, Netflix, Google, Facebook + Microsoft) the US likely keeps outperforming. If the market falls out of love with them, well, it gets harder ... There's no doubt that if Amazon can sell lots of $1,000 iphone 10s, then other companies, worldwide, that sell to consumers are losing sales and profits.

However for the rest of us, non US is home country bias, and it hurts performance & volatility.

Americans might do well to consider that thought. US is best -- except when it's not. You do not, for example, have many mining companies in your index.

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

Post by Tamalak » Fri Aug 17, 2018 8:21 am

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
No, because I've already settled on my approach to international.

BUT, I read about five topics like this before I was able to do that. They did help me!

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

Post by Glockenspiel » Fri Aug 17, 2018 8:27 am

This morning I exchanged $6,000 from VTSMX to BTMKX iShares International Index Fund (within my 401k) because my international allocation got outside its re-balance band. So I followed my short IPS (investment policy statement), to re-balance into International.

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

Post by nedsaid » Fri Aug 17, 2018 8:32 am

Valuethinker wrote:
Fri Aug 17, 2018 8:20 am
rgs92 wrote:
Thu Aug 16, 2018 10:15 pm
Is the headline here "The Death of Foreign Equities"?
(Mirroring the famous August 13, 1979 Business Week headline about US stocks.)
As long as the super cap tech cos are in the ascendant (Apple, Amazon, Netflix, Google, Facebook + Microsoft) the US likely keeps outperforming. If the market falls out of love with them, well, it gets harder ... There's no doubt that if Amazon can sell lots of $1,000 iphone 10s, then other companies, worldwide, that sell to consumers are losing sales and profits.

However for the rest of us, non US is home country bias, and it hurts performance & volatility.

Americans might do well to consider that thought. US is best -- except when it's not. You do not, for example, have many mining companies in your index.
So pretty much, you are saying that the US outperformance compared to International Markets is mainly due to the Technology Sector and a subset of stocks within that sector. You are also saying that the US does not have enough representation in all sectors, you mentioned mining as an example, but you have discussed this point in other posts. I have to think about the first point but I agree on the second. It seems that the best way to get the best diversification across sectors is to invest Internationally.
A fool and his money are good for business.

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

Post by vineviz » Fri Aug 17, 2018 9:10 am

UpperNwGuy wrote:
Thu Aug 16, 2018 9:49 pm
lostdog wrote:
Thu Aug 16, 2018 9:20 pm
columbia wrote:
Thu Aug 16, 2018 7:30 pm
It’s convinced me that people with different investment timelines do and should have different opinions on this particular subject. I wouldn’t hesitate to have VT as my line stock holding, if I were 30.


I am most certainly not 30.
Why does age make a difference in holding international equities?
Because for those of us who are old, our time horizon probably isn't long enough to see the international markets recover from their current struggles.
Here's a more analytically rigorous way to think about this: since the inception of the MSCI World index in 1970, international stocks have outperformed US stocks in 25 of the 49 calendar years. That's slightly more than half, but for the purposes of discussions let's say that in any given year international stocks have outperformed about half the time.

History tells just that shifts in favor from one asset class to another can be swift and powerful, and are almost always surprising. There's no way to predict WHICH asset class will outperform in any given year but the odds are roughly even that - GOING FORWARD - international stocks will outperform over your investment horizon, whatever that horizon is. Likewise, the odds are roughly even that US stocks will outperform over your investment horizon, whatever that is.

Therefore, the smart bet is to hold them both for two reasons. One is that you are SURE to hold the winner in any given year, if you care about such things. The second is that by holding them both you're guaranteed to get the average return of the two with lower volatility than holding just one or the other.
"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 convert949 » Fri Aug 17, 2018 9:30 am

UpperNwGuy wrote:
Thu Aug 16, 2018 9:49 pm
lostdog wrote:
Thu Aug 16, 2018 9:20 pm
columbia wrote:
Thu Aug 16, 2018 7:30 pm
It’s convinced me that people with different investment timelines do and should have different opinions on this particular subject. I wouldn’t hesitate to have VT as my line stock holding, if I were 30.


I am most certainly not 30.
Why does age make a difference in holding international equities?
Because for those of us who are old, our time horizon probably isn't long enough to see the international markets recover from their current struggles.
Also, as a retiree I have realized that I spend my money in dollars and while I hold International, at 25% of equities, I have closer to Bogles recommendation than Vanguards... (as per my IPS and I am sticking with it...)

On a general point, I do find it difficult when members (and Vanguard) offer "one size fits all" asset allocations based on "the data". Sometimes I wish that the forum would reveal the ages of members making recommendations and comments so we could keep them in perspective.

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

Post by goblue100 » Fri Aug 17, 2018 9:47 am

<Mumble>
<"Stay the course">
</Mumble>
Some people are immune to good advice. - Saul Goodman

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

Post by lostdog » Fri Aug 17, 2018 9:48 am

vineviz wrote:
Fri Aug 17, 2018 9:10 am
UpperNwGuy wrote:
Thu Aug 16, 2018 9:49 pm
lostdog wrote:
Thu Aug 16, 2018 9:20 pm
columbia wrote:
Thu Aug 16, 2018 7:30 pm
It’s convinced me that people with different investment timelines do and should have different opinions on this particular subject. I wouldn’t hesitate to have VT as my line stock holding, if I were 30.


I am most certainly not 30.
Why does age make a difference in holding international equities?
Because for those of us who are old, our time horizon probably isn't long enough to see the international markets recover from their current struggles.
Here's a more analytically rigorous way to think about this: since the inception of the MSCI World index in 1970, international stocks have outperformed US stocks in 25 of the 49 calendar years. That's slightly more than half, but for the purposes of discussions let's say that in any given year international stocks have outperformed about half the time.

History tells just that shifts in favor from one asset class to another can be swift and powerful, and are almost always surprising. There's no way to predict WHICH asset class will outperform in any given year but the odds are roughly even that - GOING FORWARD - international stocks will outperform over your investment horizon, whatever that horizon is. Likewise, the odds are roughly even that US stocks will outperform over your investment horizon, whatever that is.

Therefore, the smart bet is to hold them both for two reasons. One is that you are SURE to hold the winner in any given year, if you care about such things. The second is that by holding them both you're guaranteed to get the average return of the two with lower volatility than holding just one or the other.
+1. Thank you for this excellent explanation.
Hear the clock ticking? That’s your life flying by while you listen to market pundits and watch stock prices fluctuate. -Humble Dollar

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

Post by dcabler » Fri Aug 17, 2018 9:52 am

Based on this thread, have I changed my mind?
No - and not the last bazillion times this same subject came up.
Nor when the numerous times the subject of tilting came up
Nor when the numerous times the subject of factors came up
Etc....

:D

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

Post by cheezit » Fri Aug 17, 2018 10:32 am

I have a noob question. What's the longest period that we can track the performance and diversication benefit of a currency-hedged global-ex-US index vis-a-vis a non-currency-hedged global-ex-US index? My gut feeling is that, if we look at this in the long term, the currency hedged international index will:
* have lower volatility
* have higher correlation with the US market
* have a higher CAGR (unless we're able to go really far back, because the USD has appreciated versus other currencies since the end of the Bretton Woods system)
* have higher fees

in comparison to the unhedged index. But, I could be wrong and in any case I don't know the magnitude of any of these things even if I'm right. If someone could point me in the right direction I'd appreciate it.

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

Post by ImmigrantSaver » Fri Aug 17, 2018 10:52 am

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
No. Not even considered. But the thread is very entertaining

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

Post by wesgreen » Fri Aug 17, 2018 11:00 am

I would like to revisit this thread in 5 years, and then again in another 5 years, and then see who changes their minds. At least I was smart enough to stop rebalancing into Int. ca. 12 years ago. Going against John Bogle's advice on this was the biggest mistake of my investing career, and I probably won't be able to recoup the loss (compared to staying 100% Total US) in my lifetime. I must have lost over $125.000, which I could have really used in retirement. I've held on, not wanting to sell low, waiting for Int. to bounce up again, and plan to dump it then. Meanwhile it's been rebalancing itself down in my portfolio.
On the other hand, If I were 18 years old now, I might want to hedge against massive changes in the world order during my lifetime, and would probably go with 20% Int.
To each his own. The lesson I took away is: I better stay with what John Bogle advises. There are lots of smart people on the web with opinions and theories, but when they go against Bogle, they neither have evidence to back them up, nor his track record of being right, and it could become expensive for you to follow their advice.

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

Post by MnD » Fri Aug 17, 2018 11:07 am

This graph and article from The Economist on market capitalization and GDP sums up nicely is why I'll never take on single country risk and bets and haven't done so for decades. With broad diversification including ex-US equity I've met and exceeded all my financial goals for accumulation and am retiring in November right on my long-held schedule. I sleep much better at night knowing I don't have all my eggs in one country basket. I have more than enough and don't hand-wring over how much more i could have had if I had done dozens of things differently in the past that now look just great when looking in the rear-view mirror. Joint life expectancy tables suggest a near 4 decade retirement and the present and future is what I'm investing for - not the past. :beer

https://www.economist.com/finance-and-e ... et-indices
Image

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Worth Repeating

Post by Taylor Larimore » Fri Aug 17, 2018 11:10 am

Worth repeating:
wesgreen wrote:The lesson I took away is: I better stay with what John Bogle advises. There are lots of smart people on the web with opinions and theories, but when they go against Bogle, they neither have evidence to back them up, nor his track record of being right, and it could become expensive for you to follow their advice.
Thank you and best wishes.

Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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

Post by MnD » Fri Aug 17, 2018 11:58 am

I've been reading this forum for 10 years and I am still waiting for a single "do what Jack Bogle says" adherent to post about selling 50% of their Total Bond Market position and replacing it with an intermediate term corporate bond index fund. That's what Jack says to do given that he considers the Total Bond Market Index to be "badly flawed". Likewise with Jack's advice to consider Social Security as $350,000 in bond holdings when determining your actual asset allocation to stocks and bonds. "Do what Jack says" seems to be very optional dogma unless some snippet confirms a particular cognitive bias.
Last edited by MnD on Fri Aug 17, 2018 12:10 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 asif408 » Fri Aug 17, 2018 12:10 pm

cheezit wrote:
Fri Aug 17, 2018 10:32 am
I have a noob question. What's the longest period that we can track the performance and diversication benefit of a currency-hedged global-ex-US index vis-a-vis a non-currency-hedged global-ex-US index? My gut feeling is that, if we look at this in the long term, the currency hedged international index will:
* have lower volatility
* have higher correlation with the US market
* have a higher CAGR (unless we're able to go really far back, because the USD has appreciated versus other currencies since the end of the Bretton Woods system)
* have higher fees

in comparison to the unhedged index. But, I could be wrong and in any case I don't know the magnitude of any of these things even if I'm right. If someone could point me in the right direction I'd appreciate it.
From what I have seen, the difference between holding hedged and unhedged in minimal over long periods. IIRC, an unhedged position in international does have slightly higher volatility and slightly higher CAGR. Can't speak to the fees, but I would assume that they were higher for international as they are now.

I suggest reading Bill Bernstein's Intelligent Asset Allocator, it's an older book but covers this subject in great detail.

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

Post by MiddleOfTheRoad » Fri Aug 17, 2018 12:12 pm

bligh wrote:
Thu Aug 16, 2018 6:34 pm
9 pages in. I have to ask. Has a single person changed their position having read or participated in this thread? :shock: :oops:


:sharebeer
One of the more intersting thread in a while. Have been around 15% intl of total portfolio, but that number is drifting lower. No change in position but it did prompt me to look at things closer. Ended up buying 100 shares of VEU at 50.35. Will prob add more if it drop.

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

Post by wesgreen » Fri Aug 17, 2018 12:19 pm

Taylor, hoping to check back on this thread in 5 years with you!

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

Post by Taylor Larimore » Fri Aug 17, 2018 12:42 pm

wesgreen wrote:
Fri Aug 17, 2018 12:19 pm
Taylor, hoping to check back on this thread in 5 years with you!
wesgreen:

I hope we can. I'm 94 with a 3-year life-expectancy. :happy

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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