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

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

Post by oldzey » Sat Aug 18, 2018 12:51 am

permport wrote:
Sat Aug 18, 2018 12:38 am
Noobvestor wrote:
Sat Aug 18, 2018 12:27 am
oldzey wrote:
Fri Aug 17, 2018 11:46 pm
One of Taylor Larimore's favorite sayings is: "When experts disagree it is often because it does not make a foreseeable difference."

Steven Dunn's* remarks reinforce this observation (see #8 below), originally found at: http://socialize.morningstar.com/NewSoc ... 62377.aspx
Order of importance

As a rather sluggish slice and dice type, I think that issue versus going total stock market is way down the list of what is important in managing one's financial affairs. In order of priority, I would list what is important in the following order of priority:

1. How much you earn (the value of your human capital).
2. An intelligent insurance program.
3. Your savings rate.
4. Your allocation to stocks versus bonds.
5. Have a reasonable diversification to your portfolio (anything reasonable will do).
6. Rebalancing to manage risk.
7. Tax management.
8. International versus domestic
9. Value versus growth.
10. Small versus large.
11. Slice and dice.

After number 7, it just doesn't matter much IMO, for about 99% of investors. I say that as one who has watched the numbers pop up on my Quicken computer screen over the passing years. Some things matter a whole lot more than others as to what really influences those numbers.
*Dunn's Law: "When an asset class does well, an index fund in that asset class does even better." — Steven Dunn
I mean I don't know how else to convince someone that (8) falls under (5) other than to mention Japan, which represented 45% of the global market in 1989, then fell and stayed down. Markets can do significantly better or worse than other markets. The US benefited from tailwinds throughout the 20th Century, not least of which was a war that devastated much of the developed world overseas. Maybe it's truly an exceptional snowflake of a nation that will always come out on top, but some people thought that about Japan, too ... the price of being wrong was high.

https://madison.com/business/investment ... 84ca1.html
I agree completely and don't understand why people try to dispute this. The truth is that no one can predict the future, and wider diversification is really your only effective protection against that fact.

It's funny when I hear people like Bogle saying (paraphrased): "There's no need for international.. I mean the markets are so efficient that they arbitrage away all the excess overseas profit opportunity anyway!"

Yeah, gee, well you could make the same argument in reverse for why no one should expect the U.S. to perform better compared to the rest of the world in the future just because it did so in the past. And yet, in various interviews you hear him proclaiming how the U.S. is going to continue leading the rest of the world economically and how that's why our capital should be focused there. Highly self-contradictory it seems to me.
Dunn's "Order of importance" list was posted on 12-18-2005 - almost 13 years ago.

Has the order changed since then? Is it any different in 2018?

I wish I could predict the future. I can't do that, so I'll have to guess the future instead. 0% International still works for me.
"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 Noobvestor » Sat Aug 18, 2018 1:02 am

oldzey wrote:
Sat Aug 18, 2018 12:51 am
permport wrote:
Sat Aug 18, 2018 12:38 am
Noobvestor wrote:
Sat Aug 18, 2018 12:27 am
oldzey wrote:
Fri Aug 17, 2018 11:46 pm
One of Taylor Larimore's favorite sayings is: "When experts disagree it is often because it does not make a foreseeable difference."

Steven Dunn's* remarks reinforce this observation (see #8 below), originally found at: http://socialize.morningstar.com/NewSoc ... 62377.aspx
Order of importance

As a rather sluggish slice and dice type, I think that issue versus going total stock market is way down the list of what is important in managing one's financial affairs. In order of priority, I would list what is important in the following order of priority:

1. How much you earn (the value of your human capital).
2. An intelligent insurance program.
3. Your savings rate.
4. Your allocation to stocks versus bonds.
5. Have a reasonable diversification to your portfolio (anything reasonable will do).
6. Rebalancing to manage risk.
7. Tax management.
8. International versus domestic
9. Value versus growth.
10. Small versus large.
11. Slice and dice.

After number 7, it just doesn't matter much IMO, for about 99% of investors. I say that as one who has watched the numbers pop up on my Quicken computer screen over the passing years. Some things matter a whole lot more than others as to what really influences those numbers.
*Dunn's Law: "When an asset class does well, an index fund in that asset class does even better." — Steven Dunn
I mean I don't know how else to convince someone that (8) falls under (5) other than to mention Japan, which represented 45% of the global market in 1989, then fell and stayed down. Markets can do significantly better or worse than other markets. The US benefited from tailwinds throughout the 20th Century, not least of which was a war that devastated much of the developed world overseas. Maybe it's truly an exceptional snowflake of a nation that will always come out on top, but some people thought that about Japan, too ... the price of being wrong was high.

https://madison.com/business/investment ... 84ca1.html
I agree completely and don't understand why people try to dispute this. The truth is that no one can predict the future, and wider diversification is really your only effective protection against that fact.

It's funny when I hear people like Bogle saying (paraphrased): "There's no need for international.. I mean the markets are so efficient that they arbitrage away all the excess overseas profit opportunity anyway!"

Yeah, gee, well you could make the same argument in reverse for why no one should expect the U.S. to perform better compared to the rest of the world in the future just because it did so in the past. And yet, in various interviews you hear him proclaiming how the U.S. is going to continue leading the rest of the world economically and how that's why our capital should be focused there. Highly self-contradictory it seems to me.
Dunn's "Order of importance" list was posted on 12-18-2005 - almost 13 years ago.

Has the order changed since then?

Is it any different in 2018?

I don't know.
Sure. We have more information, for one thing. Vanguard has put out whitepapers illustrating the value of international diversification, and come to recommend more of it than before (which is reflected in their Target Date fund weights - now 40%, up from 20%). We also have Wade Pfau's research, linked and discussed upthread, illustrating that for most investors globally it has historically been helpful to diversify internationally.

International investing is now considerably cheaper, too. The the ER for Total International at Vanguard was .31% in 2005 for Investor shares (there was no Admiral option), and is now .17% for Investor shares and .11% for Admiral or ETF, so around 1/3 the cost.

On the more subjective/behavioral side: we've had a really great run over the last decade for US stocks, leading a lot of people to question the wisdom of maintaining their planned international allocation (which, in turn, spawned this entire 11-page thread). In short: recency bias.

I don't know that the order has changed so much as (8) is now more clearly than ever part of (5), effectively moving it up the list. Regardless, I'd also point out that (1) through (7) are pretty important, and it says something that US versus international comes right after those.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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

Post by Aak732 » Sat Aug 18, 2018 3:07 am

One point here, if I may (my first post on this forum...)
I understand that there are several combinations one can backtest using the Indexes (using some combo of US, Intl, Bonds, Cash, etc) to get a usable Asset Allocation to invest in.

However, has anyone checked their Asset Allocation results with those of a non-passive asset allocation fund (global or non-global). You'd be surprised at the results. Spoiler alert: in my calculation the non-passive fund won every time. Please let me know your results and do let me know if I'm mistaken.

https://www.portfoliovisualizer.com/bac ... sisResults

I used Vanguard Wellington Investor shares (VWELX) as the Benchmark Ticker. You can also try with Wellesley Income (VWINX) as the Benchmark Ticker.

Cheers!

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

Post by columbia » Sat Aug 18, 2018 6:04 am

Speaking of Wellesley: I do know of an equity index fund, which has lagged the former by 2.5% a year since 1996; the life of said fund. I’ll let the reader guess what that is. ;)

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

Post by lostdog » Sat Aug 18, 2018 7:29 am

Jonathan Clements on the Humble Dollar regarding this very subject.

http://www.humbledollar.com/2018/08/newsletter-no-30/

"YOU CAN’T GET high returns without taking high risk—and yet many investors believe that U.S. stocks are not only safer than foreign shares, but also pretty much guaranteed to outperform over the long haul. I take a look at this muddled thinking in HumbleDollar’s latest newsletter."
Last edited by lostdog on Sat Aug 18, 2018 7:40 am, edited 1 time in total.

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

Post by lostdog » Sat Aug 18, 2018 7:38 am

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

Post by Wildebeest » Sat Aug 18, 2018 7:40 am

I could not agree more with lost dog.

Another quote from
lostdog wrote:
Sat Aug 18, 2018 7:29 am
Jonathan Clements on the Humble Dollar regarding this very subject.

http://www.humbledollar.com/2018/08/newsletter-no-30/


“I believe every investor should look at his or her investment mix and ask, ‘What if I’m wrong?'”
We won’t get this short- and long-term protection if our sole investment is U.S. stocks, including U.S. multinationals. Nothing is going to zig when our U.S. stocks zag, so we lose the short-term portfolio protection. What about the long haul? We’ll be sunk if the next decade sees U.S. stocks sink.

That brings me to the contention that U.S. stocks are both safer and sure to outperform over the long term. I find this bizarre. Remember, these comments are coming from folks who have drunk the Kool-Aid, accepted that markets are efficient and banked their life’s savings on index funds.
The Golden Rule: One should treat others as one would like others to treat oneself.

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

Post by iceport » Sat Aug 18, 2018 8:39 am

lostdog wrote:
Sat Aug 18, 2018 7:29 am
Jonathan Clements on the Humble Dollar regarding this very subject.

http://www.humbledollar.com/2018/08/newsletter-no-30/

"YOU CAN’T GET high returns without taking high risk—and yet many investors believe that U.S. stocks are not only safer than foreign shares, but also pretty much guaranteed to outperform over the long haul. I take a look at this muddled thinking in HumbleDollar’s latest newsletter."
Thanks! Great article.
If we accept that markets are efficient, we’re buying into the notion that all parts of the financial markets have similar risk-adjusted expected returns. True, those expectations almost certainly won’t be met: Some market segments will do surprisingly well, while others will disappoint.

Nonetheless, our starting assumption should be that risk and expected return are joined at the hip. We shouldn’t start with the idea that one market—the U.S. stock market, in this case—is not only safer, but also pretty much guaranteed to deliver superior returns. If that were the case, rational investors everywhere would buy U.S. stocks, driving up their price and eliminating this free lunch.
"Discipline matters more than allocation.” ─William Bernstein

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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 Aug 18, 2018 8:40 am

Bear in mind that what we care about is investment returns in the future, not past returns. Since we don't know what those will be for various assets, the best way to manage the risk of being overweight in the worst assets is to diversify reasonably across assets. That strategy might not produce the best returns, but it won't produce the worst returns either. Don't be greedy.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Pete12 » Sat Aug 18, 2018 8:51 am

I am playing the long game here.

International allocation 35% of my total stock alocation. That’s it.

Just picked up some bargains with this month’s 401k contribution.

All the best
Pete

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

Post by EddyB » Sat Aug 18, 2018 10:12 am

Noobvestor wrote:
Sat Aug 18, 2018 12:27 am
oldzey wrote:
Fri Aug 17, 2018 11:46 pm
One of Taylor Larimore's favorite sayings is: "When experts disagree it is often because it does not make a foreseeable difference."

Steven Dunn's* remarks reinforce this observation (see #8 below), originally found at: http://socialize.morningstar.com/NewSoc ... 62377.aspx
Order of importance

As a rather sluggish slice and dice type, I think that issue versus going total stock market is way down the list of what is important in managing one's financial affairs. In order of priority, I would list what is important in the following order of priority:

1. How much you earn (the value of your human capital).
2. An intelligent insurance program.
3. Your savings rate.
4. Your allocation to stocks versus bonds.
5. Have a reasonable diversification to your portfolio (anything reasonable will do).
6. Rebalancing to manage risk.
7. Tax management.
8. International versus domestic
9. Value versus growth.
10. Small versus large.
11. Slice and dice.

After number 7, it just doesn't matter much IMO, for about 99% of investors. I say that as one who has watched the numbers pop up on my Quicken computer screen over the passing years. Some things matter a whole lot more than others as to what really influences those numbers.
*Dunn's Law: "When an asset class does well, an index fund in that asset class does even better." — Steven Dunn
I mean I don't know how else to convince someone that (8) falls under (5) other than to mention Japan, which represented 45% of the global market in 1989, then fell and stayed down. Markets can do significantly better or worse than other markets. The US benefited from tailwinds throughout the 20th Century, not least of which was a war that devastated much of the developed world overseas. Maybe it's truly an exceptional snowflake of a nation that will always come out on top, but some people thought that about Japan, too ... the price of being wrong was high.

https://madison.com/business/investment ... 84ca1.html
When people dismiss the single-country risk of their US-only investments by arguing that if the US tanks, it will have the same effects around the world, they seem to
Ignore how big Japan’s share of market was in the 1980s.

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

Post by Leif » Sat Aug 18, 2018 11:05 am

No place like home?
Jonathan Clements wrote:That brings me to the contention that U.S. stocks are both safer and sure to outperform over the long term. I find this bizarre. Remember, these comments are coming from folks who have drunk the Kool-Aid, accepted that markets are efficient and banked their life’s savings on index funds.
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 iceport » Sat Aug 18, 2018 11:14 am

Leif wrote:
Sat Aug 18, 2018 11:05 am
No place like home?
Jonathan Clements wrote:That brings me to the contention that U.S. stocks are both safer and sure to outperform over the long term. I find this bizarre. Remember, these comments are coming from folks who have drunk the Kool-Aid, accepted that markets are efficient and banked their life’s savings on index funds.
Humble Dollar
Yes, it's bizarre. And it also reminds me of similar tense-challenged, backtest-inspired claims about value investing...

There are some really good discussions at points in this thread. At other points it just feels to me like wallowing in the backtesting weeds.
"Discipline matters more than allocation.” ─William Bernstein

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

Post by Austintatious » Sat Aug 18, 2018 11:22 am

lostdog wrote:
Sat Aug 18, 2018 7:29 am
Jonathan Clements on the Humble Dollar regarding this very subject.

http://www.humbledollar.com/2018/08/newsletter-no-30/

"YOU CAN’T GET high returns without taking high risk—and yet many investors believe that U.S. stocks are not only safer than foreign shares, but also pretty much guaranteed to outperform over the long haul. I take a look at this muddled thinking in HumbleDollar’s latest newsletter."
Thank you. That's a well written and timely article Brother Clements has offered us. Those having long accepted that low cost, broadly diversified index funds are our best bet can be just as susceptible to recency bias as the next investor. And those of us tempted to buy into all this home grown bias would do well to read it thoughtfully.

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

Post by willthrill81 » Sat Aug 18, 2018 12:04 pm

EddyB wrote:
Sat Aug 18, 2018 10:12 am
When people dismiss the single-country risk of their US-only investments by arguing that if the US tanks, it will have the same effects around the world, they seem to ignore how big Japan’s share of market was in the 1980s.
We're not ignoring it. But when Japan's stocks tanked, the rest of the world kept on humming. In fact, the U.S. shortly after had one of the best bull markets in history right after that.

Compare that to the financial crisis of 2008, a phenomenon that originated in the U.S. International equities had a deeper drawdown than U.S. equities.

Things will likely change at some point in the future, but as of now, it surely seems that the world's equity markets rise and fall with the fate of the U.S. market.
“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 MnD » Sat Aug 18, 2018 12:46 pm

I went global market cap in equities quite abruptly in 2001 when a low-cost international index fund was added to our 401-K plan.
From 2001 through through December 2012 my global equity portfolio (approximated by the red line) ranged from about equal to slightly better than 100% US total stock market (blue line). I used a real world approximation of my 2001 balance and annual contributions since then in portfolio visualizer. Since 2013 international has lagged so overall 2001 to date my CAGR in the equity portion of my portfolio has been 12.59% versus 13.72% had I stuck with 100% single-country US. The last 5.X years accounting for all of the difference. 12.59% is certainly not a disaster and I sure wouldn't start chasing single-country hot returns now on the basis of a rear-view mirror look at the past 5.X years.

Image

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

Post by Beensabu » Sat Aug 18, 2018 12:52 pm

CraigTester wrote:
Tue Aug 14, 2018 12:48 pm
ReformedSpender wrote:
Tue Aug 14, 2018 12:23 pm
CraigTester wrote:
Tue Aug 14, 2018 12:09 pm
VEA Stats:

Top holdings include: Nestle, Toyota, Shell, BP

P/E TTM = 14.6

SEC Yield = 2.4%

As a “valuation” guy, what’s not to like?

P.S. Does anyone know of a place (similar to Shillers website for SP500) to find historical data on “International stocks”...
I'd also like to hear. I resort to annual reports found here

https://www.sec.gov/cgi-bin/browse-edga ... cd=filings

From that data, Vanguard Total International Stock saw a P/E of 12 in 2011 during the European debt crisis to a high of 20.8 in 2016. Interestingly enough, the yield hovered around 2.8% through those years with the exception of 2012 where it hit 3.3%

:beer
Cheers for the couple of calibrating data points. I'll circle back if I stumble on a good place to find more extensive data....
It's not exactly what you're looking for as it is by country, but you can compare historical CAPE for 26 countries (US + ex-US developed and emerging) on the same chart:

http://shiller.barclays.com/SM/12/en/in ... ratios.app
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by asif408 » Sat Aug 18, 2018 2:06 pm

willthrill81 wrote:
Sat Aug 18, 2018 12:04 pm
EddyB wrote:
Sat Aug 18, 2018 10:12 am
When people dismiss the single-country risk of their US-only investments by arguing that if the US tanks, it will have the same effects around the world, they seem to ignore how big Japan’s share of market was in the 1980s.
We're not ignoring it. But when Japan's stocks tanked, the rest of the world kept on humming. In fact, the U.S. shortly after had one of the best bull markets in history right after that.

Compare that to the financial crisis of 2008, a phenomenon that originated in the U.S. International equities had a deeper drawdown than U.S. equities.

Things will likely change at some point in the future, but as of now, it surely seems that the world's equity markets rise and fall with the fate of the U.S. market.
And historically that has varied by country. For instance, in the 1970s Japan had very good returns, the US did poorly, and the U.K. had a worse bear market than even during the Great Depression. On the other hand, the U.K., while having a bear market during the 1929-1932 US stock market crash, wasn't nearly as severe as the one in the US. And during 2000-2002 dot com bust emerging markets, which fell about the same as the US had a much shorter drawdown, a much faster recovery, and much better returns over the last decade. Australia is an example of an individual country in the dot com bust that had a very minor bear market relative to the US. You can find a lot of this historical data in Ibbotson and Brinsons Global Investing book.

So, really, unless you are basing history only on a few select crashes, such as the 2007-2009 crash and maybe the 1987 crash, there have been relatively few bear markets in the past century where diversification outside the US would not have helped at least somewhat other than the most recent one.

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

Post by willthrill81 » Sat Aug 18, 2018 2:14 pm

asif408 wrote:
Sat Aug 18, 2018 2:06 pm
willthrill81 wrote:
Sat Aug 18, 2018 12:04 pm
EddyB wrote:
Sat Aug 18, 2018 10:12 am
When people dismiss the single-country risk of their US-only investments by arguing that if the US tanks, it will have the same effects around the world, they seem to ignore how big Japan’s share of market was in the 1980s.
We're not ignoring it. But when Japan's stocks tanked, the rest of the world kept on humming. In fact, the U.S. shortly after had one of the best bull markets in history right after that.

Compare that to the financial crisis of 2008, a phenomenon that originated in the U.S. International equities had a deeper drawdown than U.S. equities.

Things will likely change at some point in the future, but as of now, it surely seems that the world's equity markets rise and fall with the fate of the U.S. market.
And historically that has varied by country. For instance, in the 1970s Japan had very good returns, the US did poorly, and the U.K. had a worse bear market than even during the Great Depression. On the other hand, the U.K., while having a bear market during the 1929-1932 US stock market crash, wasn't nearly as severe as the one in the US. And during 2000-2002 dot com bust emerging markets, which fell about the same as the US had a much shorter drawdown, a much faster recovery, and much better returns over the last decade. Australia is an example of an individual country in the dot com bust that had a very minor bear market relative to the US. You can find a lot of this historical data in Ibbotson and Brinsons Global Investing book.

So, really, unless you are basing history only on a few select crashes, such as the 2007-2009 crash and maybe the 1987 crash, there have been relatively few bear markets in the past century where diversification outside the US would not have helped at least somewhat other than the most recent one.
Fair enough. But one could ask how relevant data from 90 years ago is to today's global economy. To that, there is no objective answer.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by MJW » Sat Aug 18, 2018 2:34 pm

This is pretty late into the discussion here and may warrant a separate conversation, but currency considerations aside, does it make sense to look at "ex-US" as a single monolith?

That tends to be what we do when we talk about "US vs. International" -- there's US and then there's everyone else lumped together. Fundamental to the debate seems to be how the investor frames their conception of US market in relation to the rest of world. Some see the world as a single haystack of which the US is a part, and others seem to see the US as unique/special to the extent that everyone else is....well, just that: everyone else. The latter perspective leaves the investor to consider whether it is worth it to carve out a place in his/her portfolio for "everyone else" and make an arbitrary decision on how much of a place is warranted.

Not sure if this is the right thread for that discussion, but it's one direction to take the debate.

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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 Aug 18, 2018 2:56 pm

MJW wrote:
Sat Aug 18, 2018 2:34 pm
This is pretty late into the discussion here and may warrant a separate conversation, but currency considerations aside, does it make sense to look at "ex-US" as a single monolith?

That tends to be what we do when we talk about "US vs. International" -- there's US and then there's everyone else lumped together. Fundamental to the debate seems to be how the investor frames their conception of US market in relation to the rest of world. Some see the world as a single haystack of which the US is a part, and others seem to see the US as unique/special to the extent that everyone else is....well, just that: everyone else. The latter perspective leaves the investor to consider whether it is worth it to carve out a place in his/her portfolio for "everyone else" and make an arbitrary decision on how much of a place is warranted.

Not sure if this is the right thread for that discussion, but it's one direction to take the debate.
I suppose the argument could be made--much as the theoretical "equal weight" idea in domestic investing--that an investor should be fine investing equal amounts in each stock market around the world. If money truly moves freely among all markets, and if all information is priced almost instantly into each market, then a case could be made to do that.

In fact, a case could be made to equal weight every stock in every market around the world. Despite how impractical that exercise would be, even if it were fiscally possible, I disagree with the idea.

I prefer capitalization-weighting, domestically, and adding a less-than-market share of international, for diversification.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by JackoC » Sat Aug 18, 2018 4:33 pm

EddyB wrote:
Sat Aug 18, 2018 10:12 am

When people dismiss the single-country risk of their US-only investments by arguing that if the US tanks, it will have the same effects around the world, they seem to
Ignore how big Japan’s share of market was in the 1980s.
I don't know if they completely ignore Japan. They have a somewhat plausible argument that Japan was a smaller, more idiosyncratic and itself less internationalized market than the US. But I think they do underemphasize the risk of US underperformance in the future.

The other thing is comparison to Japan mixes two things which I think are unlikely to *both* happen to the US market. The first is the steep bear market in the Nikkei in the late 80's/early 90's which was not accompanied by a prolonged bear in any other major market. That pattern repeating itself except with the US market crashing and others basically unaffected is manifestly implausible IMO. And with that point, people dismissing the Japan comparison tend to rest their case. But the second thing was failure of the Nikkei to basically ever come back, to date in terms of a good return even with dividends if you got in near the top. Some of version of that I could easily see happening to the US, say as a milder version an overvalued US market makes nothing for some 10 yr period (with ups and downs), but developed markets return say 60% cumulative (~5% pa), and emergings 160% cumulative (~10% pa).

IOW I think we know *how* international markets would catch up, though not *when* they might (or even if, but lets assume sooner or later they must, it could still be too much later to do even younger investors any good). It won't be in a sudden crash of the US market that isn't reflected in similar drops everywhere else (per recent historical patterns they'd be worse elsewhere in USD terms). It would almost surely happen, when and if it does, via prolonged lackluster performance in the US v. 'haveluster' performance elsewhere.

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

Post by VaR » Sat Aug 18, 2018 4:50 pm

willthrill81 wrote:
Sat Aug 18, 2018 2:14 pm
Fair enough. But one could ask how relevant data from 90 years ago is to today's global economy. To that, there is no objective answer.
I don't think the question is objective, but that's not what I want to discuss. Instead, I want to ask which of the following are you saying:
1. ex-US markets are have high correlation with US markets on the downside but not the upside
2. ex-US markets have high correlation with US markets on both the downside and the upside, but with lower beta on both sides (go up less and down less)

You're clearly *not* saying the following:
3. ex-US markets are not correlated with US markets
4. ex-US markets are have high correlation with US markets on the upside but not the downside

There's a fourth possibility, but I'll talk about that later if there's any interest.

And the fifth possibility is that you're saying that ex-US markets have high correlation with US markets, but also have superior returns and come with lower volatility, and that the high correlation, higher returns, and lower volatility will persist into the future. But I'd like you to confirm this.

I've always been very influenced by the following Vanguard whitepaper from Feb 2014.
Global equities: Balancing home bias and diversification
This paper concludes that although no one answer fits all investors,
empirical and practical considerations suggest a reasonable starting
allocation to non-U.S. stocks of 20%, with an upper limit based on
global market capitalization, subject to the investor’s perspective on
the short- and long-term trade-offs.
A 30% allocation to international equities would have provided 90% of the maximum diversification benefit
The paper also notes that since the start of the European Debt Crisis in 2011, ex-US stocks have not provided any diversification benefit (as defined as a reduction in portfolio volatility) for an all equity portfolio.

BTW, I want to make it clear that my own position is that any international allocation from zero to market weight is not unreasonable. I am at 20% of equities, which is underweight from my target of 30% due to the overperformance of some legacy individual U.S. securities.

Last note: I was wondering if anyone cared to refute the following marketing piece by Fidelity. You can ignore Myth 5, it's the least interesting to me.

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

Post by willthrill81 » Sat Aug 18, 2018 5:51 pm

VaR wrote:
Sat Aug 18, 2018 4:50 pm
willthrill81 wrote:
Sat Aug 18, 2018 2:14 pm
Fair enough. But one could ask how relevant data from 90 years ago is to today's global economy. To that, there is no objective answer.
I don't think the question is objective, but that's not what I want to discuss. Instead, I want to ask which of the following are you saying:
1. ex-US markets are have high correlation with US markets on the downside but not the upside
2. ex-US markets have high correlation with US markets on both the downside and the upside, but with lower beta on both sides (go up less and down less)

You're clearly *not* saying the following:
3. ex-US markets are not correlated with US markets
4. ex-US markets are have high correlation with US markets on the upside but not the downside

There's a fourth possibility, but I'll talk about that later if there's any interest.

And the fifth possibility is that you're saying that ex-US markets have high correlation with US markets, but also have superior returns and come with lower volatility, and that the high correlation, higher returns, and lower volatility will persist into the future. But I'd like you to confirm this.

I've always been very influenced by the following Vanguard whitepaper from Feb 2014.
Global equities: Balancing home bias and diversification
This paper concludes that although no one answer fits all investors,
empirical and practical considerations suggest a reasonable starting
allocation to non-U.S. stocks of 20%, with an upper limit based on
global market capitalization, subject to the investor’s perspective on
the short- and long-term trade-offs.
A 30% allocation to international equities would have provided 90% of the maximum diversification benefit
The paper also notes that since the start of the European Debt Crisis in 2011, ex-US stocks have not provided any diversification benefit (as defined as a reduction in portfolio volatility) for an all equity portfolio.

BTW, I want to make it clear that my own position is that any international allocation from zero to market weight is not unreasonable. I am at 20% of equities, which is underweight from my target of 30% due to the overperformance of some legacy individual U.S. securities.

Last note: I was wondering if anyone cared to refute the following marketing piece by Fidelity. You can ignore Myth 5, it's the least interesting to me.
Over the last few decades, international has, in general, had higher volatility than the U.S. and lower returns. Of course there have been years where international outperformed (so have short-term Treasuries and gold, FWIW), but that's been the overall trend for at least the last 30 years (a long time in my book but clearly not in others'). There's been no cumulative reward by owning international (other than coming through 2000-2009 better but paying it for later with poor returns)and no long-term manifested diversification benefit (compared to U.S.). None of that is my opinion.

Whether this will persist going forward is a matter of conjecture on anyone's part. Some believe that international will certainly outperform the U.S. over a lengthy period due to [fill in the blank]. Some believe that the U.S. will continue to outperform international. I don't know which will happen. But we must place our 'bets' with the information in front of us. And those who say that a 'global market cap weighted' AA isn't a 'bet' are deceiving themselves. Any AA is a bet of sorts, even if the odds, historic or otherwise, are stacked in your favor.

I honestly don't know what I would do if I wasn't a trend follower (I don't have a static AA). The U.S. has been a great market for decades, but it might turn into Japan 2.0. If I did incorporate international into my portfolio, it would be at least half of my equities, because I would be investing international to stave off the 'Japan 2.0' issue, and a 20% allocation to international just wouldn't be likely to be effective in that regard. But for this reason, I think that even the global market cap position, objectively, is still riskier than many believe because 50% of it is in just one country.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by nps » Sat Aug 18, 2018 6:49 pm

UpperNwGuy wrote:
Fri Aug 17, 2018 9:21 pm
And the future appears to be very similar to the present.
I can't tell if this is a joke...

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

Post by indexonlyplease » Sat Aug 18, 2018 7:08 pm

Vanguard increased the internationl percent in their Target Funds. Could they ever decrease the percent?

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

Post by Noobvestor » Sat Aug 18, 2018 8:08 pm

indexonlyplease wrote:
Sat Aug 18, 2018 7:08 pm
Vanguard increased the internationl percent in their Target Funds. Could they ever decrease the percent?
In theory, sure. My suspicion, though, is that they are moving toward market weights - I'm mildly surprised they haven't just added a lower-cost Vanguard Total World Admiral and made that part of the LifeStrategy and Target Date funds. Simple and done.
willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
Over the last few decades, international has, in general, had higher volatility than the U.S. and lower returns. Of course there have been years where international outperformed (so have short-term Treasuries and gold, FWIW), but that's been the overall trend for at least the last 30 years (a long time in my book but clearly not in others'). There's been no cumulative reward by owning international (other than coming through 2000-2009 better but paying it for later with poor returns)and no long-term manifested diversification benefit (compared to U.S.). None of that is my opinion.
Over the last few decades, [X Market/Sector/Style] has had lower volatility than the U.S. with higher returns. None of that is my opinion, either! Investing based on last 30 years as an aggregate block seems like a really poor proposition, given that we can sub in all kinds of assets here. That's a long time in my book too, but not a great basis for picking a forward-looking allocation IMHO. As others have pointed out: we can't conclude both that international is riskier and that it provides less return (historically and going forward) without admitting an inexplicable inefficiency. But for those who truly believe it: why stop at betting on the U.S.? Why not picking other winning countries, sectors, stocks? Slippery slope.
willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
Whether this will persist going forward is a matter of conjecture on anyone's part. Some believe that international will certainly outperform the U.S. over a lengthy period due to [fill in the blank]. Some believe that the U.S. will continue to outperform international. I don't know which will happen. But we must place our 'bets' with the information in front of us. And those who say that a 'global market cap weighted' AA isn't a 'bet' are deceiving themselves. Any AA is a bet of sorts, even if the odds, historic or otherwise, are stacked in your favor.
Any investing is a 'bet' if you define 'betting' loosely enough, but only one position is a starting point for total-market investors: the total (global) market. Assuming we're going to invest in stocks, that's the most neutral default - shifting away is a bet, for better or worse. And we don't need to guess at whether international or U.S. will outperform - those of us who are 50/50 are agnostic to that question.
willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
I honestly don't know what I would do if I wasn't a trend follower (I don't have a static AA). The U.S. has been a great market for decades, but it might turn into Japan 2.0. If I did incorporate international into my portfolio, it would be at least half of my equities, because I would be investing international to stave off the 'Japan 2.0' issue, and a 20% allocation to international just wouldn't be likely to be effective in that regard. But for this reason, I think that even the global market cap position, objectively, is still riskier than many believe because 50% of it is in just one country.
I agree completely that 20% international is insufficient to make a big difference and even 50% is still a large bet on the US. That said, if you have a portfolio that is, say, 60/40 stocks/bonds and stocks are split 50/50 US/international, well, your 'bets' are at least spread three ways!
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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

Post by willthrill81 » Sat Aug 18, 2018 8:39 pm

Noobvestor wrote:
Sat Aug 18, 2018 8:08 pm
As others have pointed out: we can't conclude both that international is riskier and that it provides less return (historically and going forward) without admitting an inexplicable inefficiency.
I wouldn't call home country bias an "inexplicable efficiency." It tends to be even stronger in international markets than the U.S. Investors in other nations may choose to leave their capital in their home country rather than invest abroad, even if the latter would be more efficient.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Noobvestor » Sat Aug 18, 2018 8:46 pm

willthrill81 wrote:
Sat Aug 18, 2018 8:39 pm
Noobvestor wrote:
Sat Aug 18, 2018 8:08 pm
As others have pointed out: we can't conclude both that international is riskier and that it provides less return (historically and going forward) without admitting an inexplicable inefficiency.
I wouldn't call home country bias an "inexplicable efficiency." It tends to be even stronger in international markets than the U.S. Investors in other nations may choose to leave their capital in their home country rather than invest abroad, even if the latter would be more efficient.
I don't see your point. Are you saying that individual investors betting on their home countries drives a permanent inefficiency in the global stock market such that the United States has a permanent advantage? Sounds like a free lunch for institutional investors to me. Again: inexplicable.

That said: ironically, home-country bias makes more sense everywhere outside the US if you consider currency risk. If I were based in any other country, I'd probably overweight domestic equities for currency reasons, so as not to get swamped by USD. US investors have no such reason.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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

Post by willthrill81 » Sat Aug 18, 2018 8:58 pm

Noobvestor wrote:
Sat Aug 18, 2018 8:46 pm
willthrill81 wrote:
Sat Aug 18, 2018 8:39 pm
Noobvestor wrote:
Sat Aug 18, 2018 8:08 pm
As others have pointed out: we can't conclude both that international is riskier and that it provides less return (historically and going forward) without admitting an inexplicable inefficiency.
I wouldn't call home country bias an "inexplicable efficiency." It tends to be even stronger in international markets than the U.S. Investors in other nations may choose to leave their capital in their home country rather than invest abroad, even if the latter would be more efficient.
I don't see your point. Are you saying that individual investors betting on their home countries drives a permanent inefficiency in the global stock market such that the United States has a permanent advantage? Sounds like a free lunch for institutional investors to me. Again: inexplicable.
Not permanent, but perhaps persistent.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by Noobvestor » Sat Aug 18, 2018 10:45 pm

willthrill81 wrote:
Sat Aug 18, 2018 8:58 pm
Noobvestor wrote:
Sat Aug 18, 2018 8:46 pm
willthrill81 wrote:
Sat Aug 18, 2018 8:39 pm
Noobvestor wrote:
Sat Aug 18, 2018 8:08 pm
As others have pointed out: we can't conclude both that international is riskier and that it provides less return (historically and going forward) without admitting an inexplicable inefficiency.
I wouldn't call home country bias an "inexplicable efficiency." It tends to be even stronger in international markets than the U.S. Investors in other nations may choose to leave their capital in their home country rather than invest abroad, even if the latter would be more efficient.
I don't see your point. Are you saying that individual investors betting on their home countries drives a permanent inefficiency in the global stock market such that the United States has a permanent advantage? Sounds like a free lunch for institutional investors to me. Again: inexplicable.
Not permanent, but perhaps persistent.
Irrelevant if institutional/active investors dominate the playing field and arbitrage away buy-and-hold investor preferences, which they do.

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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 Aug 18, 2018 11:26 pm

MJW wrote:
Sat Aug 18, 2018 2:34 pm
This is pretty late into the discussion here and may warrant a separate conversation, but currency considerations aside, does it make sense to look at "ex-US" as a single monolith?
No, it doesn't. This thread is too unwieldy and contentious to have a conversation about what would serve better, though.

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

Post by zuma » Sun Aug 19, 2018 3:07 am

The endless debate on this topic is amusing. Everyone has their biases.

I invest in international stocks (20%) because:

1) diversification is a core investing principle; therefore my default position includes global equities
2) non-US stocks have outperformed US stocks during some (arbitrarily chosen) 10-year periods in the past
3) the future is unknown; predictions are often wrong
4) it probably won't make a huge difference either way

Basically, by default I want stocks from around the world.

So far I haven't heard a compelling reason to invest only in the US.

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

Post by indexonlyplease » Sun Aug 19, 2018 5:36 am

I have a 50/50 AA with 20% in international stocks,

Question: when I reballance in January of 2019 (I only do this onces a year) can I just leave the percent invested in the international alone. Meaning don't sell move any money into it. Just let it increase on its own if it will. Since I read 20% will not make much of a difference anyway.

Since I am retired and not adding money to my accounts can I just let it ride. Making sure my AA stays around the 50/50 I want. I do read reballacing may not help?

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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 Aug 19, 2018 6:52 am

indexonlyplease wrote:
Sun Aug 19, 2018 5:36 am
I have a 50/50 AA with 20% in international stocks,

Question: when I reballance in January of 2019 (I only do this onces a year) can I just leave the percent invested in the international alone. Meaning don't sell move any money into it. Just let it increase on its own if it will. Since I read 20% will not make much of a difference anyway.

Since I am retired and not adding money to my accounts can I just let it ride. Making sure my AA stays around the 50/50 I want. I do read reballacing may not help?
This might be better placed in the "Help with personal finance" section, so as not to get swept away in the current in this spirited discussion.
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by CraigTester » Sun Aug 19, 2018 7:29 am

Beensabu wrote:
Sat Aug 18, 2018 12:52 pm
CraigTester wrote:
Tue Aug 14, 2018 12:48 pm
ReformedSpender wrote:
Tue Aug 14, 2018 12:23 pm
CraigTester wrote:
Tue Aug 14, 2018 12:09 pm
VEA Stats:

Top holdings include: Nestle, Toyota, Shell, BP

P/E TTM = 14.6

SEC Yield = 2.4%

As a “valuation” guy, what’s not to like?

P.S. Does anyone know of a place (similar to Shillers website for SP500) to find historical data on “International stocks”...
I'd also like to hear. I resort to annual reports found here

https://www.sec.gov/cgi-bin/browse-edga ... cd=filings

From that data, Vanguard Total International Stock saw a P/E of 12 in 2011 during the European debt crisis to a high of 20.8 in 2016. Interestingly enough, the yield hovered around 2.8% through those years with the exception of 2012 where it hit 3.3%

:beer
Cheers for the couple of calibrating data points. I'll circle back if I stumble on a good place to find more extensive data....
It's not exactly what you're looking for as it is by country, but you can compare historical CAPE for 26 countries (US + ex-US developed and emerging) on the same chart:

http://shiller.barclays.com/SM/12/en/in ... ratios.app
Thanks for the link, Beensabu.

But I can’t seem to access? ( Stuck in a loop after the software asks if I’m a retail or institutional investor....)

All this debate about US vs international....would be great to see the actual historical data to determine how they have statistically compared over the years.

Cheers.

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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 Aug 19, 2018 7:55 am

zuma wrote:
Sun Aug 19, 2018 3:07 am


So far I haven't heard a compelling reason to invest only in the US.
- lower volatility due to avoiding currency exposure also international markets have tended towards higher volatility than USA
- lower costs (much less of an argument than it was in the past)
- limited gains from international diversification (and potentially higher volatility)
- lower returns (on a historic basis very long run)
- possible adverse tax issues (over to an American on that one)

These are all good reasons (of varying strength e.g. I don't find the historic performance one particularly persuasive, I see it just as much an argument for international diversification, if one believes performances revert towards a mean).

Most of the other reasons advanced in these threads are spurious because they imply that the market is not informationally efficient - that known advantages of US listed companies are not known by the market and correctly priced by the market. In other words, an arbitrage strategy of longing USA and shorting all other international markets would generate a permanent positive return on a risk-adjusted basis.

I reiterate (like a broken record ;-)) that home country bias might be forgivable for an American investor, it is not for any of the rest of us.

FWIW I think the Turkey crisis underlines that Eurozone will continue to underperform for some time. However if we have another bear market in tech stocks, the US market will suffer.

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

Post by zuma » Sun Aug 19, 2018 8:07 am

Valuethinker wrote:
Sun Aug 19, 2018 7:55 am
zuma wrote:
Sun Aug 19, 2018 3:07 am


So far I haven't heard a compelling reason to invest only in the US.
- lower volatility due to avoiding currency exposure also international markets have tended towards higher volatility than USA
- lower costs (much less of an argument than it was in the past)
- limited gains from international diversification (and potentially higher volatility)
- lower returns (on a historic basis very long run)
- possible adverse tax issues (over to an American on that one)

These are all good reasons (of varying strength e.g. I don't find the historic performance one particularly persuasive, I see it just as much an argument for international diversification, if one believes performances revert towards a mean).
Fair enough. Some investors may find these reasons compelling. However, I am only speaking for myself and I'm not trying to dissuade anyone else from a US-only strategy if it works for them :)

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

Post by Johnnie » Sun Aug 19, 2018 10:10 am

Past performance and history as a guide for the future received some attention in this (and other) threads, and I wanted to say something obvious and perhaps well known but still worth mentioning:

History tells us that it's possible for a thing that has already happened to happen. Obviously that doesn't mean history will repeat, but it's a lot more concrete than speculating about things that have never happened.

If it happened before it's possible. If it never happened before then maybe it is possible and maybe it isn't.
"I know nothing."

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

Post by Beensabu » Sun Aug 19, 2018 10:24 am

CraigTester wrote:
Sun Aug 19, 2018 7:29 am
Beensabu wrote:
Sat Aug 18, 2018 12:52 pm
CraigTester wrote:
Tue Aug 14, 2018 12:48 pm
ReformedSpender wrote:
Tue Aug 14, 2018 12:23 pm
CraigTester wrote:
Tue Aug 14, 2018 12:09 pm
VEA Stats:

Top holdings include: Nestle, Toyota, Shell, BP

P/E TTM = 14.6

SEC Yield = 2.4%

As a “valuation” guy, what’s not to like?

P.S. Does anyone know of a place (similar to Shillers website for SP500) to find historical data on “International stocks”...
I'd also like to hear. I resort to annual reports found here

https://www.sec.gov/cgi-bin/browse-edga ... cd=filings

From that data, Vanguard Total International Stock saw a P/E of 12 in 2011 during the European debt crisis to a high of 20.8 in 2016. Interestingly enough, the yield hovered around 2.8% through those years with the exception of 2012 where it hit 3.3%

:beer
Cheers for the couple of calibrating data points. I'll circle back if I stumble on a good place to find more extensive data....
It's not exactly what you're looking for as it is by country, but you can compare historical CAPE for 26 countries (US + ex-US developed and emerging) on the same chart:

http://shiller.barclays.com/SM/12/en/in ... ratios.app
Thanks for the link, Beensabu.

But I can’t seem to access? ( Stuck in a loop after the software asks if I’m a retail or institutional investor....)

All this debate about US vs international....would be great to see the actual historical data to determine how they have statistically compared over the years.

Cheers.
Hmmm. There's no subscription or anything involved. When I found it, I clicked "Retail" and then had to accept a disclaimer. The disclaimer is a pop-up, so maybe check your pop-up blocker and let an exception through for that site?
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."

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

Post by BlueEars » Sun Aug 19, 2018 11:11 am

willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
...
I honestly don't know what I would do if I wasn't a trend follower (I don't have a static AA). The U.S. has been a great market for decades, but it might turn into Japan 2.0. If I did incorporate international into my portfolio, it would be at least half of my equities, because I would be investing international to stave off the 'Japan 2.0' issue, and a 20% allocation to international just wouldn't be likely to be effective in that regard. But for this reason, I think that even the global market cap position, objectively, is still riskier than many believe because 50% of it is in just one country.
I think you are on to something here. A trend following algorithm between the US markets and international is one way to avoid long term under performance to a US only portfolio. Assuming the method only has a modest number of trades and is used in a tax deferred account it can succeed over the long term.

I've personally used this since 2009 with my own funds. I've divided up my 40% international allocation into large cap (SP500 versus VFWAX) and small/mid caps (VINEX versus VMVAX). Currently this is 100% US but that could change on a monthly basis. Since 2009 the trend following method led to my international allocation performing only slightly under the US numbers. Backtests from the 1970's to present indicate this has some robustness.

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

Post by siamond » Sun Aug 19, 2018 2:47 pm

Beensabu wrote:
Sat Aug 18, 2018 12:52 pm
It's not exactly what you're looking for as it is by country, but you can compare historical CAPE for 26 countries (US + ex-US developed and emerging) on the same chart:

http://shiller.barclays.com/SM/12/en/in ... ratios.app
This is a terrific pointer, and we can easily download the entire monthly history of the data. Very cool, I've been looking for something like that for a while... Thanks a lot for sharing.

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

Post by CraigTester » Sun Aug 19, 2018 3:00 pm

Beensabu wrote:
Sun Aug 19, 2018 10:24 am
CraigTester wrote:
Sun Aug 19, 2018 7:29 am
Beensabu wrote:
Sat Aug 18, 2018 12:52 pm
CraigTester wrote:
Tue Aug 14, 2018 12:48 pm
ReformedSpender wrote:
Tue Aug 14, 2018 12:23 pm


I'd also like to hear. I resort to annual reports found here

https://www.sec.gov/cgi-bin/browse-edga ... cd=filings

From that data, Vanguard Total International Stock saw a P/E of 12 in 2011 during the European debt crisis to a high of 20.8 in 2016. Interestingly enough, the yield hovered around 2.8% through those years with the exception of 2012 where it hit 3.3%

:beer
Cheers for the couple of calibrating data points. I'll circle back if I stumble on a good place to find more extensive data....
It's not exactly what you're looking for as it is by country, but you can compare historical CAPE for 26 countries (US + ex-US developed and emerging) on the same chart:

http://shiller.barclays.com/SM/12/en/in ... ratios.app
Thanks for the link, Beensabu.

But I can’t seem to access? ( Stuck in a loop after the software asks if I’m a retail or institutional investor....)

All this debate about US vs international....would be great to see the actual historical data to determine how they have statistically compared over the years.

Cheers.
Hmmm. There's no subscription or anything involved. When I found it, I clicked "Retail" and then had to accept a disclaimer. The disclaimer is a pop-up, so maybe check your pop-up blocker and let an exception through for that site?
Thanks Beensabu. And yes, I get the pop-up. But after I hit accept, It strangely returns me to the beginning screen again?

But it doesn’t sound like exactly what I’m looking for anyway.

My goal is to compare actual inflation adj, dividend reinvested returns for as far back as data will allow.

To me, this is the only way to really answer whether international belongs in ones portfolio.

Very simply, if long term returns match sp500, but just behind lately, that sounds like a buying opportunity.

However if long term results are actually inferior, I don’t want to “dilute” my long term results with a lower performer.

Thanks for trying to help (twice)

Cheers

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

Post by CraigTester » Sun Aug 19, 2018 3:08 pm

BlueEars wrote:
Sun Aug 19, 2018 11:11 am
willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
...
I honestly don't know what I would do if I wasn't a trend follower (I don't have a static AA). The U.S. has been a great market for decades, but it might turn into Japan 2.0. If I did incorporate international into my portfolio, it would be at least half of my equities, because I would be investing international to stave off the 'Japan 2.0' issue, and a 20% allocation to international just wouldn't be likely to be effective in that regard. But for this reason, I think that even the global market cap position, objectively, is still riskier than many believe because 50% of it is in just one country.
I think you are on to something here. A trend following algorithm between the US markets and international is one way to avoid long term under performance to a US only portfolio. Assuming the method only has a modest number of trades and is used in a tax deferred account it can succeed over the long term.

I've personally used this since 2009 with my own funds. I've divided up my 40% international allocation into large cap (SP500 versus VFWAX) and small/mid caps (VINEX versus VMVAX). Currently this is 100% US but that could change on a monthly basis. Since 2009 the trend following method led to my international allocation performing only slightly under the US numbers. Backtests from the 1970's to present indicate this has some robustness.
Nice.

I’m very interested in doing some similar back testing.

Do you mind sharing where you found your data for International?

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

Post by BlueEars » Sun Aug 19, 2018 3:16 pm

CraigTester wrote:
Sun Aug 19, 2018 3:00 pm
....

My goal is to compare actual inflation adj, dividend reinvested returns for as far back as data will allow.
...
In the past I've used MSCI data. This is the link to download the MSCI EAFE index but it requires Adobe Flash which I don't have on my system for security reasons:
https://www.msci.com/end-of-day-data-search

Perhaps it contains long term data. In the past this data went back to 1970.

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

Post by BlueEars » Sun Aug 19, 2018 3:25 pm

CraigTester wrote:
Sun Aug 19, 2018 3:08 pm
BlueEars wrote:
Sun Aug 19, 2018 11:11 am
willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
...
I honestly don't know what I would do if I wasn't a trend follower (I don't have a static AA). The U.S. has been a great market for decades, but it might turn into Japan 2.0. If I did incorporate international into my portfolio, it would be at least half of my equities, because I would be investing international to stave off the 'Japan 2.0' issue, and a 20% allocation to international just wouldn't be likely to be effective in that regard. But for this reason, I think that even the global market cap position, objectively, is still riskier than many believe because 50% of it is in just one country.
I think you are on to something here. A trend following algorithm between the US markets and international is one way to avoid long term under performance to a US only portfolio. Assuming the method only has a modest number of trades and is used in a tax deferred account it can succeed over the long term.

I've personally used this since 2009 with my own funds. I've divided up my 40% international allocation into large cap (SP500 versus VFWAX) and small/mid caps (VINEX versus VMVAX). Currently this is 100% US but that could change on a monthly basis. Since 2009 the trend following method led to my international allocation performing only slightly under the US numbers. Backtests from the 1970's to present indicate this has some robustness.
Nice.

I’m very interested in doing some similar back testing.

Do you mind sharing where you found your data for International?
If the MSCI site won't work nowadays, the Yahoo historical data is pretty good. You should be able to go back quite far, maybe 25 years or so for some funds data. I would focus on monthly data, not daily. For instance, I believe Yahoo data for VGTSX data will go back to around 1997.

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

Post by BlueEars » Sun Aug 19, 2018 3:40 pm

Here is a chart of the EAFE and SP500 (includes dividends) for 1970 to 2015:

Image

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willthrill81
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by willthrill81 » Sun Aug 19, 2018 4:15 pm

BlueEars wrote:
Sun Aug 19, 2018 11:11 am
willthrill81 wrote:
Sat Aug 18, 2018 5:51 pm
...
I honestly don't know what I would do if I wasn't a trend follower (I don't have a static AA). The U.S. has been a great market for decades, but it might turn into Japan 2.0. If I did incorporate international into my portfolio, it would be at least half of my equities, because I would be investing international to stave off the 'Japan 2.0' issue, and a 20% allocation to international just wouldn't be likely to be effective in that regard. But for this reason, I think that even the global market cap position, objectively, is still riskier than many believe because 50% of it is in just one country.
I think you are on to something here. A trend following algorithm between the US markets and international is one way to avoid long term under performance to a US only portfolio. Assuming the method only has a modest number of trades and is used in a tax deferred account it can succeed over the long term.

I've personally used this since 2009 with my own funds. I've divided up my 40% international allocation into large cap (SP500 versus VFWAX) and small/mid caps (VINEX versus VMVAX). Currently this is 100% US but that could change on a monthly basis. Since 2009 the trend following method led to my international allocation performing only slightly under the US numbers. Backtests from the 1970's to present indicate this has some robustness.
So do you use a relative strength criterion for determining which asset classes to move into?
“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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BlueEars
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Re: It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!

Post by BlueEars » Sun Aug 19, 2018 4:25 pm

willthrill81 wrote:
Sun Aug 19, 2018 4:15 pm
...
So do you use a relative strength criterion for determining which asset classes to move into?
Yes, basically a momentum based strategy i.e. trend following. Somewhat like the approach Antonacci uses but I rolled my own before his book came out. Never read his book but I have seen articles describing the method. I'd recommend each investor develop his own rules based system if interested.

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

Post by willthrill81 » Sun Aug 19, 2018 4:36 pm

BlueEars wrote:
Sun Aug 19, 2018 4:25 pm
willthrill81 wrote:
Sun Aug 19, 2018 4:15 pm
...
So do you use a relative strength criterion for determining which asset classes to move into?
Yes, basically a momentum based strategy i.e. trend following. Somewhat like the approach Antonacci uses but I rolled my own before his book came out. Never read his book but I have seen articles describing the method. I'd recommend each investor develop his own rules based system if interested.
I'd second that. Trend followers need to have enough confidence in their strategy to "stay the course." Switching between different strategies is likely to be just as bad as buy-and-holders fiddling with their AA, factors, etc.

My own strategy is definitely 'long biased', mainly in order to stave off whipsaws. I only move out of stocks if both the unemployment rate is above its 12 month moving average (based on analysis done at Philosophical Economics) and stocks are trading below their 7 month moving average (my own preference, but anything from 3 months to well over a year is historically fine). When it comes to determining which stock indexes to be in, I own those that have had the highest relative performance over the prior seven months (in each account, 401k, IRA, HSA, etc.).
“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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