"Why Jack Bogle Doesn't Own Non-U.S. Stocks"

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visualguy
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by visualguy » Wed Oct 17, 2018 10:59 am

ReformedSpender wrote:
Wed Oct 17, 2018 10:36 am
visualguy wrote:
Tue Oct 16, 2018 10:58 pm

+1

Can't bring myself to invest in something that has had such poor performance over the long run.

There's no credible doom-and-gloom scenario for the US in my lifetime, and definitely not one where the US market collapses, while foreign ones don't.
Recency bias much?

I think this type of perspective is flawed. Yes, when the US crashes and burns, chances are high the RoW will too. But what if other plausible scenarios pan out? Tech (FAANG) has lead the US markets to ATH's and with it, valuations. Eventually, growth of those select few are going to sputter out. What if the US enters a multi year stagnate period while the shift into the next leading sector is underway? Will the growth internationally also stop when its markets have relied less on the likes of buybacks, FAANG or other high-fliers?

You have to believe saavy investors will/are eyeballing valuations of world stocks and future potential for returns and international stocks will (eventually) have their period(s) of outperformance once again.
Not ruling out a period when ex-US will perform better than US, and that's happened before, of course. It's the long-term periods which have been a big problem for ex-US. I don't want to bet that this will change in the future, so I stay away.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by willthrill81 » Wed Oct 17, 2018 11:01 am

cheezit wrote:
Wed Oct 17, 2018 9:21 am
willthrill81 wrote:
Tue Oct 16, 2018 8:45 pm
I wonder how many have changed their position as a direct result of this endless U.S./international equities issue. :?: I suspect that I know the answer.
During the last iteration of this thread (the one with "DISASTER" in the title), I ended up reading some of the papers that got linked in the discussion. I ruminated over the points made in the thread and by Vanguard and some other companies' research departments, looked at data going back as far as I could, and ended up changing my equity allocation from 0% international to 25%.

I picked that level because it seemed to be near the historic sweet spot in terms of diversification benefit, and also in terms of regret minimization - at a 25%-of-equities allocation, I won't be kicking myself for missing out if international takes off over the next few decades nor sweating the effect on overall returns if it's a dog going forward. Tilting towards my home country (without going 100%) also made sense to me because foreign-denominated stocks carry uncompensated exchange rate risk which USD-denominated stocks do not, and going with a currency-hedged international fund is not feasible for me now as my 401k doesn't offer one, and I haven't done a partial rollover to my Vanguard Roth yet where I might be able to find an ETF with palatable expenses (HEFA has potential with an ER of 0.35 through the next year at least, though it's still substantially worse than VGTSX in that regard, and I haven't looked at its composition in-depth yet).
Thanks for sharing. You're one more than I thought would have changed their mind about the issue.
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by jadd806 » Wed Oct 17, 2018 11:07 am

Man, this topic has been getting rather tired lately. We're seeing like 1-2 threads per week essentially saying the same thing.

The funny part is they always seem to be started by the 100% US crowd. Just look at how the most recent thread titles are worded:

"Why Jack Bogle Doesn't Own Non-U.S. Stocks"
"The benefits of international diversification - NOT: Hulbert"
"It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!"

On average, the 100% US folks sure do seem to need their opinions validated more often than global market cappers. I'm no psychologist but that would seem to suggest some insecurity in their beliefs. Guess that's what happens when you don't own the haystack.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by Valuethinker » Wed Oct 17, 2018 11:10 am

tk1978 wrote:
Tue Oct 16, 2018 11:27 pm
As a US citizen born abroad who spent well over a half of his life in Europe, I find the general attitude in this thread somewhat disturbing. Perhaps I shouldn't be surprised given that 64% of the US population doesn't own a passport...
Read about what's happening in the US Foreign Service. This is the diplomatic corps of the world's pre eminent global superpower*.

We should not be surprised. If you have contemplated Brexit then you see the even more depressing version of same in a post-Imperial power and this in a country where a 2 week holiday in Spain every year is viewed as almost a citizenship right ...
I have 20% of my assets in international + 5% in emerging markets. Wil I be better off in 30 years than if I were 100% US? I don't know, but I think so. It seems like a very Boglehead-y thing to do.
It's to maximize diversification but with a mindful eye to taking on volatility.

I think the key is the tech sector. The FAANGs + Microsoft have driven a lot of the US outperformance of the last decade. As long as those companies continue to surprise on the upside, that outperformance will continue. If the tech stocks lose their way, the US index gets hit disproportionately hard.

The other is that the US financials post Crash managed to write off assets and recapture momentum - Europe is stuck in its own slow motion financial mess.


* to some extent that is because the Pentagon has become the prime mover of American foreign policy - the resources available to a CENTCOM commander in Qatar, say, vs. any US diplomat in the region. That trend was clear even in the 1980s and 90s but the more so since 9-11.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by MJW » Wed Oct 17, 2018 11:11 am

harvestbook wrote:
Wed Oct 17, 2018 8:09 am
Everyone has made up their minds and we are each so brilliant that we know in our hearts we are right.
My mind is far from made up – at least in terms of whether I believe my international holdings are going to be “worth it” for me in the long run. I’m skeptical, but really I have no idea. For the most part I am a convictionless investor. I'm also open to changing my mind, even though that seems to be viewed as weakness in today's dialectical zeitgeist. When it comes to forming my own opinion, the people who come off as the most convinced and dogmatic are the ones I tend to tune out. They don’t know, either. They just happen to be more willing to characterize opposing viewpoints as stupid/hypocritical/whatever. That doesn’t make them more right, and that applies to both sides of the argument.

It’s a shame that a forum like this one exhibits such an undercurrent of divisiveness and a “those people” mentality. In the grand scheme of things this is a fairly benign subject and really not worth ridiculing someone over a difference of opinion, in spite of how easy the Internet makes it to do this.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by linenfort » Wed Oct 17, 2018 11:13 am

lostdog wrote:
Wed Oct 17, 2018 7:29 am
I would go as far as saying the 100% U.S. only crowd are stock pickers making bets on a sector. Based on the boglehead philosophy, they're not truly bogleheads.
Oh, the irony! Jack Bogle is out of the bogleheads. At least according to some strangers on the internet.

As far as international investing goes, I think I treat it like I treat gold.
Well, first I note Taylor's post that says Bogle's advice is no more than 20% and Vanguard's current advice is no less than 20%.
Then,
- I admit that I'm irrational on this. I sleep better with far more U.S. and very little international.
- When asked for advice by non-boglehead novice investors, I will point them first to Taylor's 20%. That is, I don't practice what I preach.
- I don't try to argue for less international or more (U.S.) domestic equities on this forum. I just quietly do it.
bogleheads, don't knock state lotteries. They helped defund the mafia.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by lostdog » Wed Oct 17, 2018 11:14 am

jadd806 wrote:
Wed Oct 17, 2018 11:07 am
Man, this topic has been getting rather tired lately. We're seeing like 1-2 threads per week essentially saying the same thing.

The funny part is they always seem to be started by the 100% US crowd. Just look at how the most recent thread titles are worded:

"Why Jack Bogle Doesn't Own Non-U.S. Stocks"
"The benefits of international diversification - NOT: Hulbert"
"It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!"

On average, the 100% US folks sure do seem to need their opinions validated more often than global market cappers. I'm no psychologist but that would seem to suggest some insecurity in their beliefs. Guess that's what happens when you don't own the haystack.
I agree. Were there any of these threads in 2017?

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by willthrill81 » Wed Oct 17, 2018 11:17 am

linenfort wrote:
Wed Oct 17, 2018 11:13 am
lostdog wrote:
Wed Oct 17, 2018 7:29 am
I would go as far as saying the 100% U.S. only crowd are stock pickers making bets on a sector. Based on the boglehead philosophy, they're not truly bogleheads.
Oh, the irony! Jack Bogle is out of the bogleheads. At least according to some strangers on the internet.
:oops:

I just don't understand why so many on both sides of the issue are so militant about it. And with the one exception above, exceptionally few people seem apt to change their minds about the issue.
“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: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by Riley15 » Wed Oct 17, 2018 11:20 am

jadd806 wrote:
Wed Oct 17, 2018 11:07 am
Man, this topic has been getting rather tired lately. We're seeing like 1-2 threads per week essentially saying the same thing.

The funny part is they always seem to be started by the 100% US crowd. Just look at how the most recent thread titles are worded:

"Why Jack Bogle Doesn't Own Non-U.S. Stocks"
"The benefits of international diversification - NOT: Hulbert"
"It's not enough to mumble "Stay the Course"... INT'L Investing has been a disaster!"

On average, the 100% US folks sure do seem to need their opinions validated more often than global market cappers. I'm no psychologist but that would seem to suggest some insecurity in their beliefs. Guess that's what happens when you don't own the haystack.

+1 Exactly! Most posts like this just seem to seek validation and are not really actionable. I am guessing when International outperforms US we'll see more threads like" Why Int'l investing is so important" and "New recommendation to hold minimum 30% Int'l". Sadly by then you may have already missed the boat.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by bligh » Wed Oct 17, 2018 11:21 am

tk1978 wrote:
Wed Oct 17, 2018 10:51 am
samsdad wrote:
Wed Oct 17, 2018 10:07 am
So if I buy a share of Petróleo Brasileiro S.A.—Petrobras—a semi-public Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro, Brazil, I’m not transferring my wealth to the Brazilian government? Really? Where does the money go?

If I buy a share of Vanguard International Value, which according to Morningstar owns approximately 3.7 million shares of Petrobas, you’re saying I’m not transferring my wealth, in part, to Petrobras and therefore, by extension the Brazilian government, through Vanguard? (I’m not picking on Brazil, or the company—it was literally the first international stock that popped into my quaint brain.)
I think the only instance where you could make some sort of argument that you are transferring wealth to outside of the US (which I don't understand why you are concerned about in the first place given that your taxes go to support countries such as Saudi Arabia every single year) is if you were participating in an IPO. Otherwise, if you are buying anything in the secondary market you are "transferring your wealth" to the seller, who may be American for all you know.
More importantly, as long as you own it. It is _your_ wealth and hence American wealth. When a Chinese company goes out and buys a European car maker, they are not transferring wealth abroad. They are acquiring assets abroad. When you buy shares in Nestle or PBR you are purchasing and owning assets abroad. That is not a transfer of wealth, that wealth is still yours. What do you think is the real transfer of wealth.. A group of American's buying a 20% stake in BMW, or instead a group of Germans buying a 20% stake in General Motors? I'd rather it was Americans buying out huge shares in international companies.

This whole investing internationally is transferring wealth outside the US talk is silly.

If it matters so much to samsdad... you transfer wealth abroad when doing things like going on an international vacations to Europe, donating to international charities, or importing goods where the majority of the value added was created elsewhere. ie. You do it when _Spending_ money not investing it.
Last edited by bligh on Wed Oct 17, 2018 11:24 am, edited 2 times in total.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by cheezit » Wed Oct 17, 2018 11:22 am

Perhaps we all could try to write actionable advice and analysis about the potential benefits and drawbacks of weighing domestic vs international stocks at various levels instead of becoming internet detectives on weird vendettas against people who disagree with us on the subject of asset allocation? I don't understand the level of acrimony (or the number of political diatribes and insinuations that everyone but the person making a given post is a rube) that this topic brings out.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by junior » Wed Oct 17, 2018 11:22 am

Riley15 wrote:
Wed Oct 17, 2018 11:20 am

+1 Exactly! Most posts like this just seem to seek validation and are not really actionable. I am guessing when International outperforms US we'll see more threads like" Why Int'l investing is so important" and "New recommendation to hold minimum 30% Int'l". Sadly by then you may have already missed the boat.
This thread is only actionable if you already own International and want to "buy high and sell low" in order to switch to 100% U.S.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by MJW » Wed Oct 17, 2018 11:23 am

willthrill81 wrote:
Wed Oct 17, 2018 11:17 am
I just don't understand why so many on both sides of the issue are so militant about it. And with the one exception above, exceptionally few people seem apt to change their minds about the issue.
It's just the way of the world. No different than the political landscape in the US. The forum is a microcosm for how people think and act toward one another.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by bligh » Wed Oct 17, 2018 11:26 am

MJW wrote:
Wed Oct 17, 2018 11:23 am
willthrill81 wrote:
Wed Oct 17, 2018 11:17 am
I just don't understand why so many on both sides of the issue are so militant about it. And with the one exception above, exceptionally few people seem apt to change their minds about the issue.
It's just the way of the world. No different than the political landscape in the US. The forum is a microcosm for how people think and act toward one another.
+1
Such a depressing thought.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by willthrill81 » Wed Oct 17, 2018 11:34 am

bligh wrote:
Wed Oct 17, 2018 11:26 am
MJW wrote:
Wed Oct 17, 2018 11:23 am
willthrill81 wrote:
Wed Oct 17, 2018 11:17 am
I just don't understand why so many on both sides of the issue are so militant about it. And with the one exception above, exceptionally few people seem apt to change their minds about the issue.
It's just the way of the world. No different than the political landscape in the US. The forum is a microcosm for how people think and act toward one another.
+1
Such a depressing thought.
Yes. :(
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by texasdiver » Wed Oct 17, 2018 12:01 pm

All the giant companies that dominate both the US and foreign indexes are enormous multi-nationals that play heavily in both the US and world markets.

Ford vs Toyota?
Apple vs Samsung?
Exxon vs BP?
Proctor & Gamble vs Unilever?
Pfizer Pharmaceuticals vs Roche?
Monsanto vs Bayer?
Chase vs HSBC?

I would suggest that the future values of each of those companies depends much more on the growth of their sectors worldwide rather than in which particular country they have their nominal headquarters and in which stock exchange their shares are traded. If I'm a boglehead investor with a 30-50 year investing horizon I see no rational reason to limit my holdings to only those companies on the left and exclude all of those on the right. We aren't talking about investing in Zimbabwe. These are British, Dutch, German, and Japanese companies. Most of those countries have been conducting business around the world and creating wealth for a whole lot longer than the US has even been a country.

The world is a very different place than it was in 1950.
Last edited by texasdiver on Wed Oct 17, 2018 12:06 pm, edited 1 time in total.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by MnD » Wed Oct 17, 2018 12:01 pm

To be accurate, the "other side" of this type of thread (which I've never observed in 10+ years here) would be a regular barrage of posts advocating 100% non-US only investing with subtle and not so subtle digs at US public, non-profit and private institutions, markets, laws, and culture along with various characterizations of US citizens with regards to work ethic and productivity etc. The 100% US threads seem to be an outlet for those with fear, insecurity and loathing of things outside of the US versus anything informative regarding investing.

I'm sure there are many forums on the Internet where one could go on all day about the inherent superiority of the US and its citizens and the various flaws in "everywhere else" such that owning some stock in companies like Nestle, Samsung, and Toyota is ill-advised. It's just unfortunate that a small subset on this forum seem to be fixated on communicating this here over and over and over......
Everyone on this board "gets it" that some people don't want to own any ex-US equity. Great!

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by vineviz » Wed Oct 17, 2018 12:14 pm

The large number of people boasting about owning no international stocks, combined with the irrational and convoluted reasons offered in support of such a xenophobic allocation, prompted me to nearly double my personal international allocation from roughly 20% to 40%.

So these threads were actionable for me.
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by ReformedSpender » Wed Oct 17, 2018 12:22 pm

vineviz wrote:
Wed Oct 17, 2018 12:14 pm
The large number of people boasting about owning no international stocks, combined with the irrational and convoluted reasons offered in support of such a xenophobic allocation, prompted me to nearly double my personal international allocation from roughly 20% to 40%.

So these threads were actionable for me.
:beer
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by tadamsmar » Wed Oct 17, 2018 12:27 pm

samsdad wrote:
Wed Oct 17, 2018 10:07 am
So if I buy a share of Petróleo Brasileiro S.A.—Petrobras—a semi-public Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro, Brazil, I’m not transferring my wealth to the Brazilian government? Really? Where does the money go?
I think it's like anything else you buy. If you pay more than the value of the thing, then you are transferring wealth to the buyer. Otherwise, you are transferring wealth to yourself.

Beyond that, it's philosophical. Are us capitalist transferring wealth to or from the working-class?

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by cheezit » Wed Oct 17, 2018 12:35 pm

tadamsmar wrote:
Wed Oct 17, 2018 12:27 pm
Beyond that, it's philosophical. Are us capitalist transferring wealth [...] from the working-class?
No, that's landlords you're thinking of. Capitalism can certainly concentrate wealth, but it also creates some (in the last couple of centuries, a boatload) so it isn't pure reverse-robin-hood wealth extraction from poor to rich the way rents are.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by TropikThunder » Wed Oct 17, 2018 12:38 pm

samsdad wrote:
Wed Oct 17, 2018 10:07 am
So if I buy a share of Petróleo Brasileiro S.A.—Petrobras—a semi-public Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro, Brazil, I’m not transferring my wealth to the Brazilian government? Really? Where does the money go?
It goes to the person you bought the shares from! Sure, if you buy oil from Petrobras I guess that’s transferring wealth to Brazil in a way, at least to the publicly owned portion of the company.

Or do you mean if you could trace the entire historical ownership of those particular shares, you’d eventually find where they were sold in an IPO from the Brazilian government?

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by Riley15 » Wed Oct 17, 2018 12:47 pm

MJW wrote:
Wed Oct 17, 2018 11:23 am
willthrill81 wrote:
Wed Oct 17, 2018 11:17 am
I just don't understand why so many on both sides of the issue are so militant about it. And with the one exception above, exceptionally few people seem apt to change their minds about the issue.
It's just the way of the world. No different than the political landscape in the US. The forum is a microcosm for how people think and act toward one another.

Yes it may as well be a Coke vs Pepsi debate! Each side has their opinions on why one is better and some even rely on fancy numbers/charts and famous personalities to back up their bias. But in the end we all really know Coke is better. :wink:

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by JoMoney » Wed Oct 17, 2018 12:55 pm

MnD wrote:
Wed Oct 17, 2018 12:01 pm

To be accurate, the "other side" of this type of thread (which I've never observed in 10+ years here) would be a regular barrage of posts advocating 100% non-US only investing with subtle and not so subtle digs at US public, non-profit and private institutions, markets, laws, and culture along with various characterizations of US citizens with regards to work ethic and productivity etc. The 100% US threads seem to be an outlet for those with fear, insecurity and loathing of things outside of the US versus anything informative regarding investing.

I'm sure there are many forums on the Internet where one could go on all day about the inherent superiority of the US and its citizens and the various flaws in "everywhere else" such that owning some stock in companies like Nestle, Samsung, and Toyota is ill-advised. It's just unfortunate that a small subset on this forum seem to be fixated on communicating this here over and over and over......
Everyone on this board "gets it" that some people don't want to own any ex-US equity. Great!
vineviz wrote:
Wed Oct 17, 2018 12:14 pm
The large number of people boasting about owning no international stocks, combined with the irrational and convoluted reasons offered in support of such a xenophobic allocation, prompted me to nearly double my personal international allocation from roughly 20% to 40%.

So these threads were actionable for me.
Has that actually been said by someone in this thread other than you? Are you maybe projecting your own rational, i.e. that YOU think it's somehow "Xenophobic", and that's a more powerful negative rational for you to buy international rather than the reasons people typically give like:
-Transacting/holding an international portfolio is more expensive, and has higher costs and taxes
-The "diversification benefit" of adding it to a portfolio hasn't held up under scrutiny
-International stocks are riskier, and there certainly hasn't been data showing a "risk premium" associated with it
-A US portfolio is pretty well diversified on it's own, including being primarily giant multi-national companies many of which have more assets held overseas, employ more people overseas, some even headquartered outside the U.S... they just trade on a US exchange primarily and follow SEC regulations. (if someone was "Xenophobic" with their stock portfolio, holding a US index fund would actually be a pretty irrational way to go about it)
Last edited by JoMoney on Wed Oct 17, 2018 1:00 pm, edited 1 time in total.
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by gluskap » Wed Oct 17, 2018 12:58 pm

I'm 100% US stocks no international and not 80+ (I'm 39). My reasoning is a lot of US companies are global and so I already have some international exposure. I do this more for simplicity and because ER are lower for VTSAX (0.04%) vs VGTSX (0.11%). For now I'm probably chasing a bit of past performance but I do believe in momentum and while US stocks are outperforming on average international I'm happy with my allocation for now. If at some point, US stocks start to lose some ground I will probably increase my international exposure to get more diversified but I don't see myself holding more than 10-20%.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by tadamsmar » Wed Oct 17, 2018 1:03 pm

John Bogle owns these non-U.S. stocks:

Sucor Energy Inc., Canada
Unilever, Netherlands
Chubb, Switzerland
Total SA, France
AstraZeneca, UK

these are in the top 25 holding of the Wellesley and Wellington Funds, and he says he still has a small investment in those funds

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by MJW » Wed Oct 17, 2018 1:07 pm

Perhaps someone will clarify:

I seem to be in a minority around here in that I do hold international stocks but I am also skeptical/unconvinced that it is going to better help me achieve my goals. I do not see myself removing this allocation but I also am not overly enthusiastic about having it, either.

So, how xenophobic does this position make me? Maybe not as xenophobic as someone who has chosen the 100% US route, but maybe just xenophobic enough to still be ashamed of myself for it? If those of you who are far more certain of your position than I am of mine can enlighten me I would appreciate it.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by vineviz » Wed Oct 17, 2018 1:07 pm

JoMoney wrote:
Wed Oct 17, 2018 12:55 pm
vineviz wrote:
Wed Oct 17, 2018 12:14 pm
The large number of people boasting about owning no international stocks, combined with the irrational and convoluted reasons offered in support of such a xenophobic allocation, prompted me to nearly double my personal international allocation from roughly 20% to 40%.

So these threads were actionable for me.
Has that actually been said by someone in this thread other than you?
I’m not sure I get your point.

I am saying that I find the reasons that people offer for excluding non-U.S. stocks to be irrational and convoluted.

No one else has used those exact words in this thread besides me, AFAIK, but I doubt I’m the only person who thinks this.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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JoMoney
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by JoMoney » Wed Oct 17, 2018 1:08 pm

gluskap wrote:
Wed Oct 17, 2018 12:58 pm
I'm 100% US stocks no international and not 80+ (I'm 39). My reasoning is a lot of US companies are global and so I already have some international exposure. I do this more for simplicity and because ER are lower for VTSAX (0.04%) vs VGTSX (0.11%). For now I'm probably chasing a bit of past performance but I do believe in momentum and while US stocks are outperforming on average international I'm happy with my allocation for now. If at some point, US stocks start to lose some ground I will probably increase my international exposure to get more diversified but I don't see myself holding more than 10-20%.
If you weren't on this forum, I wonder if you would even notice if/when international was performing better than a U.S. index fund.
The "All Country World Index" isn't a typical benchmark followed in financial media, and most of the time it seems when stocks in general are doing well, things are ok... and when they're doing bad, they're all doing bad.
Whenever the next period of international outperformance occurs, it will be interesting to see if there are any U.S. index investors starting threads talking about bailing on their portfolio allocation, we've certainly seen plenty of threads from people looking to bail on their international allocations.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by tadamsmar » Wed Oct 17, 2018 1:12 pm

Riley15 wrote:
Wed Oct 17, 2018 12:47 pm
Yes it may as well be a Coke vs Pepsi debate! Each side has their opinions on why one is better and some even rely on fancy numbers/charts and famous personalities to back up their bias. But in the end we all really know Coke is better. :wink:
Coke is better because Pepsi has a big joint venture with one those risky international stocks: Unilever. Unilever domiciles in a tiny country, think of the sovereign risk, think of the currency risk. Even the name of their currency is an oxymoron: Swiss Franc. How could you trust a currency like that?

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by JoMoney » Wed Oct 17, 2018 1:25 pm

vineviz wrote:
Wed Oct 17, 2018 1:07 pm
JoMoney wrote:
Wed Oct 17, 2018 12:55 pm
vineviz wrote:
Wed Oct 17, 2018 12:14 pm
The large number of people boasting about owning no international stocks, combined with the irrational and convoluted reasons offered in support of such a xenophobic allocation, prompted me to nearly double my personal international allocation from roughly 20% to 40%.

So these threads were actionable for me.
Has that actually been said by someone in this thread other than you?
I’m not sure I get your point.

I am saying that I find the reasons that people offer for excluding non-U.S. stocks to be irrational and convoluted.

No one else has used those exact words in this thread besides me, AFAIK, but I doubt I’m the only person who thinks this.
I suppose what I'm getting at, is that there is no shortage of reasons and rational people can come up with. Nobody believes their reasons are "irrational". What it doesn't show, is how different people weight/value their reasons. If someone believes that it's somehow "Xenophobic" to not hold international stocks, and that thought holds a higher weighting in their own view, there could be a thousand other reasons based on things like costs, risk, past performance, and it may not hold as much weight to that individuals personal view, but that doesn't make it "irrational" or "xenophobic" from the perspective of anyone else.
I'm vaguely reminded of a passage from the "Intelligent Investor" I believe, where Benjamin Graham discussed buying international bonds, where he actually addressed the topic that some Americans actually do feel like they're obliged in some manner of generosity to buy international... I'm going to see if I can find the quote/reference.

[edit] Found the quote, it's not quite what I was thinking of, so I may be confusing it with another reference
Benjamin Graham in The Intelligent Investor wrote:...
Years ago an argument of sorts was made for the purchase of foreign bonds here on the grounds that a rich creditor nation such as ours was under moral obligation to lend abroad. Time, which brings so many revenges, now finds us dealing with an intractable balance-of-payments problem of our own, part of which is ascribable to the large-scale purchase of foreign bonds by American investors seeking a small advantage in yield. For many years past we have questioned the inherent attractiveness of such investments from the standpoint of the buyer; perhaps we should add now that the latter would benefit both his country and himself if he declined these opportunities.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by Chief_Engineer » Wed Oct 17, 2018 1:37 pm

I'm personally 70/30 US/int. I remember seeing some analysis posted here showing that some home country bias was merited and resulted in better risk adjusted returns for many different countries. In the end it boiled down to around 70/30 for a US based investor. That was good enough for me.

I think the strength of the views expressed on both sides of the issue is just a reflection of the current global political climate. The politics of the US and Europe are very much centered around nationalism vs globalism. Look no further than Brexit and prominence of tariff vs free-trade debate.

If I cross my fingers I've got an investment horizon of 60 years. That long enough that I want to hedge against a slow decline in the US. Plus, if I'm wrong it means the US is doing great and I won't care.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by ThePrince » Wed Oct 17, 2018 1:39 pm

jibantik wrote:
Tue Oct 16, 2018 10:41 pm
venkman wrote:
Tue Oct 16, 2018 9:50 pm
"Nobody knows nothin'. Except when it comes to whether or not you should own international stocks."
+1
lostdog wrote:
Tue Oct 16, 2018 10:01 pm
"Buy the haystack!" except for international...
+2

Go total world sheeple. It is THE boglehead fund.
This is what I have recently done. Otherwise, you’re placing bets.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by nedsaid » Wed Oct 17, 2018 1:43 pm

JoMoney, you should invest your money in a logical fashion and not because of a form of political correctness. Being a US only investor doesn't make you xenophobic. It is simply a difference of opinion. If Mr. Bogle wants to be a US only investor and has his logical reasons for doing so, more power to him. His views are defensible and are not irrational. I disagree with him on this point but he has been right, so far.

This is one reason that I encourage people to write their own Investment Policy Statement. It is a way for you to examine your core beliefs. My beliefs are probably 80% in alignment with Bogle's so I am not going to insult him just because we have some areas of disagreement. This is still a free country, at least the last time I checked.

The thing is, the US only vs. a World portfolio argument is inconclusive. Good points can be made on each side. One of my core beliefs is that wide diversification is better than narrow diversification. That is a big reason I diversify all across the world. If Vanguard had a Mars Index Fund, I would probably invest in that too. Bogle would write a blog article that he is an "earth only" investor. We would have "why should we invest in Mars anyways?" threads at the Bogleheads forum. Larry Swedroe would come out with a book on the virtues of Interplanetary diversification. Perhaps he would identify performance factors that relate only to Martian stocks.

As long as the US retains its unique competitive advantages compared to the rest of the world, a US only philosophy should continue to work just fine. So far, so good.
A fool and his money are good for business.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by bligh » Wed Oct 17, 2018 1:50 pm

MJW wrote:
Wed Oct 17, 2018 1:07 pm
Perhaps someone will clarify:

I seem to be in a minority around here in that I do hold international stocks but I am also skeptical/unconvinced that it is going to better help me achieve my goals. I do not see myself removing this allocation but I also am not overly enthusiastic about having it, either.

So, how xenophobic does this position make me? Maybe not as xenophobic as someone who has chosen the 100% US route, but maybe just xenophobic enough to still be ashamed of myself for it? If those of you who are far more certain of your position than I am of mine can enlighten me I would appreciate it.
I am in the same boat. I own international even though I *think* the US will continue to outperform. The reason I still hold international at market weight, is the same reason I invest in index funds. Before I went the Boglehead route I had > 15% of my net worth in a single stock.. AAPL. I made a good chunk of change on that stock over the years. What is interesting is, I *believed* it would continue to do well, even as I sold it and moved the money into the 3 fund portfolio. Indeed it did just that! .. Also, there are plenty of stocks in the various index funds that I would really rather not own but they are there and so I own them.

You either believe you can pick stocks and come out ahead long term, or you believe you cannot. If you believe you can pick stocks then you should be an active investor and the Boglehead method of passive investing will not satisfy you.

The way I see US or Australia is that they are outperforming regions within the global equity market.. just as technology and health care may be outperforming sectors. Japan and China may be underperforming regions just as commodities and utilities may be underperforming sectors. I dont pick companies, I don't pick sectors and I don't pick regions. I have opinions on which ones will perform great, but I dont let those guide me in my investments.

Why? Because I believe I cannot predict the future. I remind myself I expected 2017 to be a down year.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by JoMoney » Wed Oct 17, 2018 2:00 pm

nedsaid wrote:
Wed Oct 17, 2018 1:43 pm
... If Vanguard had a Mars Index Fund, I would probably invest in that too...
Under some of the premises that get talked about on here, many would justify that as being additional "diversification", and on the grounds of it being the universe of investable products portfolio you should hold it at market weights ... Completely disregarding whether market weights suits your own individual risk preferences or performance expectations.
I find it interesting, that some of the EMH proponents believe that market weightings of a global portfolio would somehow be best, while at the same time acknowledging that throughout the world very few people hold it at that weighting. Most of the world has a "home bias" (although, FWIW according to Fed data the US holds more international stocks than ex-US holds of US stocks), but they don't like to acknowledge that the "bias" might be grounded in very rational reasons based on the risk preferences (on very real risks) that an investor get into when they start buying securities where they have limited or no legal recourse on.
Some of these same people will rationalize a "tilt" to small stocks or whatever based on risk preferences, but ignore the risks (and individual preferences) when it comes to international investing.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by nedsaid » Wed Oct 17, 2018 2:22 pm

JoMoney wrote:
Wed Oct 17, 2018 2:00 pm
nedsaid wrote:
Wed Oct 17, 2018 1:43 pm
... If Vanguard had a Mars Index Fund, I would probably invest in that too...
Under some of the premises that get talked about on here, many would justify that as being additional "diversification", and on the grounds of it being the universe of investable products portfolio you should hold it at market weights ... Completely disregarding whether market weights suits your own individual risk preferences or performance expectations.
I find it interesting, that some of the EMH proponents believe that market weightings of a global portfolio would somehow be best, while at the same time acknowledging that throughout the world very few people hold it at that weighting. Most of the world has a "home bias" (although, FWIW according to Fed data the US holds more international stocks than ex-US holds of US stocks), but they don't like to acknowledge that the "bias" might be grounded in very rational reasons based on the risk preferences (on very real risks) that an investor get into when they start buying securities where they have limited or no legal recourse on.
Some of these same people will rationalize a "tilt" to small stocks or whatever based on risk preferences, but ignore the risks (and individual preferences) when it comes to international investing.
For example, I am quesy about investing in such countries as China, Russia, and Turkey. I would want to underweight these countries in my portfolio. In my New 'Doo thread, I posted about the Morningstar Stock Intersection tool and using it on my own portfolio. To my dismay, I found 2 or 3 Chinese stocks in my top 25 stocks. I guess I am invested in these countries whether I like them or not. Although I love Emerging Markets as an asset class, I don't overdo them. Putting too much octane in the portfolio raises the risks of blowing your portfolio up. So pretty much, my bark is worse than my bite. I actually am more cautious than I sound.
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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by carofe » Wed Oct 17, 2018 2:27 pm

staythecourse wrote:
Tue Oct 16, 2018 6:08 pm
All I can say about this argument is the majority of folks who support U.S. centric only investments are: 1. U.S. raised and 2. Old (80+). Sorry but this thought process is nearly (if ever) recommended by anyone outside of those 2 characteristics. It just proves that no matter how intelligent and innovative bias don't disappear over time.

I don't really care how anyone else invests as it is their money, but just object to selective biased beliefs. Many who are vocal market capers somehow justify cutting out 50% of the world markets (about 20-25% equity and bonds). If one is U.S. only and don't truly market cap then those folks should have no problem with another investor who chooses to overweight US SCV or any other sector as they are doing the same thing.

Good luck.
I'm not a US citizen or born here, I came here 7 years ago, I lived in two other countries and have dual citizenship from them, and I'm 36 years old. I don't have international, I'm with Jack on this one.
US Total Stock Market + Intermediate Term Bond. That's it.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by carofe » Wed Oct 17, 2018 2:33 pm

MJW wrote:
Wed Oct 17, 2018 1:07 pm
Perhaps someone will clarify:

I seem to be in a minority around here in that I do hold international stocks but I am also skeptical/unconvinced that it is going to better help me achieve my goals. I do not see myself removing this allocation but I also am not overly enthusiastic about having it, either.

So, how xenophobic does this position make me? Maybe not as xenophobic as someone who has chosen the 100% US route, but maybe just xenophobic enough to still be ashamed of myself for it? If those of you who are far more certain of your position than I am of mine can enlighten me I would appreciate it.
Here in the US "xenophobic" has a pretty bad connotation. Why do you classify others in that "category" so quickly because of their position? Why are you judging people so quickly? When you judge people with heavy words like that you are just provoking "bad" feelings in others that might think your "classification" is right, just because the word you used.
US Total Stock Market + Intermediate Term Bond. That's it.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by assyadh » Wed Oct 17, 2018 2:36 pm

To me, VTWSX/VT is the only 'true' boglehead portfolio holding.

it's lazy, it's boring and it doesn't make any bet on who is better or why. I let that to active investors.

tbf, I hold 55% VTI / 45% VXUS so I am inline with VT portfolio, but more stocks.

I buy the haystack, cause I'm stupid. Also, I am a US resident, but from Europe, so it changes my mind. And believe me the world is full of people that wants to eat your lunch, so guess what, I let them do it, and I get shares of their stock.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by ginmqi » Wed Oct 17, 2018 2:50 pm

bligh wrote:
Tue Oct 16, 2018 2:04 pm
To save everyone the effort of repeating all the back and forth that has happened on the prior threads I will summarize the counter arguments:

1) The future may not look like the past
2) Australia has outperformed the US historically
3) Plenty of good companies outside the US too
4) If you are okay with single country risk - We remind you of Japan
5) Currency risk can also be reframed as currency diversification. If the Dollar can rise against the other currencies, it can also fall.
6) If higher risk has been priced into International stocks you aren't really getting a bad deal.
7) While we are restricting ourselves geographically and politically based on past performance... why not replace 100% US, with say 100% West coast (FANGTA)? Or say companies only from the top 5 or 10 most innovative states historically? Let's go back to active management while we are at it.

Listen, I am no one to disagree with people of Taylor or Jack's stature. But before you go 100% stock make sure you have a good reason to strike out all of the above reasons. Remember those of us who invest internationally usually never say you should "underweight" the US. We are either overweighting the US or holding it at market weight.

Being 100% US isn't bad but it isn't better.
Some of those counter arguments are not directly related to US vs non-US stocks specifically. I'll try to do some rebuttal of those reasons.

1) The future may not look like the past
This a general argument made for ANY investment in ANYTHING. Why invest in stocks at all? Or bonds? Or any other asset class? It doesn't specifically apply to non-US or US stocks. This is a general truth to be said of not only investable assets but life in general.

2) Australia has outperformed the US historically
Ironically, Reason 1 directly contradicts this point. The past does not predict the future. Plus you would have to know which country to invest in. But given Mr. Bogle's logic, one could find a reason to invest in US-like countries with similar high level of infrastructure and society orderliness and tolerable amounts of corruption...ie Australia, Western Europe....

3) Plenty of good companies outside the US too
There are plenty of good ANYTHING outside the US. Whose to say those are going to continue their growth? You'll have to make sure you pick the right companies for the next 10-20-30 years....

4) If you are okay with single country risk - We remind you of Japan
Cherry-picking Australia for the good and Japan for the bad. Is own-country/own-nationalist view a risk? There is certainly an argument to be made here. But in this regard it means one should diversify across MANY nations to really reduce risk....

5) Currency risk can also be reframed as currency diversification. If the Dollar can rise against the other currencies, it can also fall.
To-MAY-toe...To-MAH-toe. One should not be convinced to invest in foreign stocks simply because "well the dollar CAN fall too you know...."

6) If higher risk has been priced into International stocks you aren't really getting a bad deal.
If is the operating word here...and I would like to know more about how this is not "really" getting a bad deal. It seems to imply there is some objective pricing that these stocks are measured to and if we use this kind of invisible measurement...then comparing that to the current price it's not "really a bad deal." hmm.....

7) While we are restricting ourselves geographically and politically based on past performance... why not replace 100% US, with say 100% West coast (FANGTA)? Or say companies only from the top 5 or 10 most innovative states historically? Let's go back to active management while we are at it.

Looks like there are at least couple of fallacies are included in this kind of rebuttal.
1 - Strawman fallacy. This misrepresents the argument for US stocks. No one is arguing for specific sectors/geographies or even individual stocks within the US. The argument is for US stocks in general, country-wide.
2 - Loaded question fallacy. The proposed question has the easily seen presumption built-in to make anyone who actually tries to answer this question look foolish.
3 - Moving the goal post fallacy. The argument for US stocks in general is dismissed and now these new claims are question why other forms of "US stocks" are also not valid.
4 - Slippery slope fallacy. Semi-related, but it argues that because some arguments for US stocks in general have been made, then it must be true then to use this kind of logic in an absurd slipper slope manner to arrive at some equally absurd conclusion (ie, why not west coast? why not a single group of US companies?)

Look, I'm not a huge fan of being 100% US. I still have much to learn/read, and I probably will have some foreign exposure as well...but just wanted to add my thoughts and stir more discussion.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by willthrill81 » Wed Oct 17, 2018 3:05 pm

JoMoney wrote:
Wed Oct 17, 2018 2:00 pm
I find it interesting, that some of the EMH proponents believe that market weightings of a global portfolio would somehow be best, while at the same time acknowledging that throughout the world very few people hold it at that weighting. Most of the world has a "home bias" (although, FWIW according to Fed data the US holds more international stocks than ex-US holds of US stocks), but they don't like to acknowledge that the "bias" might be grounded in very rational reasons based on the risk preferences (on very real risks) that an investor get into when they start buying securities where they have limited or no legal recourse on.
I've made the same point. U.S. investors tend to be significantly closer to a global market cap position than investors in other nations. A big part of this is because the U.S. is 50% of the world. A U.S. only investor is halfway to a global market cap position, whereas a Swedish-only investor is only 1.9% of the way there, for instance.

Also, I don't understand how some people reconcile the global market cap position with single country risk. Investors who are global market cap weighted still have half their portfolio in one country. Some argue that this is the least risky position to take, but I don't buy that logic. If anything happens to that one country, their whole portfolio will suffer, even if there aren't negative spillover effects to the rest of the world, and virtually everyone agrees that there almost certainly would be (e.g. 2008).

For those most concerned about country risk, I believe that something like 10-20% exposure to one country would be about all they should want.
“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: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by tadamsmar » Wed Oct 17, 2018 3:17 pm

If you had put your $10,000 in the Templeton Growth Fund in 11/1954 you would have over $13,000,000. The SP500 made about half that.

Curious that Bogle has been fond of displaying the Telltale Charts showing the historical relative reversal of fortunes for all sorts of asset class comparisons except US vs International.
Last edited by tadamsmar on Wed Oct 17, 2018 4:32 pm, edited 1 time in total.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by GammaPoint » Wed Oct 17, 2018 3:23 pm

I think there are various good reasons why a US investor would be US-only for their investments (e.g., lower costs being reasonable). I personally do not find those reasons sufficient, and so I ideally hold closer to market weight (though I'm overweight international at the moment because I think there's a really good chance that they will outperform in the future and I'm willing to make that active bet).

I doubt many US investors are US-only for xenophobic reasons. They either simply believe in the logic of US companies being broadly exposed to other markets, are sensitive to small differences in ER, have the standard home-bias that most investors have, or other similar reasons. That said, at least one poster in this thread has been using language to defend their US-only view that is strongly correlated with xenophobic positions, and so I understand why this thread got on that path.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by JoMoney » Wed Oct 17, 2018 3:25 pm

willthrill81 wrote:
Wed Oct 17, 2018 3:05 pm
...
For those most concerned about country risk, I believe that something like 10-20% exposure to one country would be about all they should want.
That would certainly be inline with suggestions Jack Bogle has made for those who do choose to hold international. I really haven't seen anyone dogmatically arguing that nobody should ever hold international. Certainly not Mr. Bogle, who believes it's not necessary, but for those who do believe there's a benefit they should probably limit it to 20%... for reasons that Mr. Bogle and others enumerate, but are apparently not persuasive and of lesser value than the reasons those who do hold international do so.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by MJW » Wed Oct 17, 2018 3:54 pm

carofe wrote:
Wed Oct 17, 2018 2:33 pm
MJW wrote:
Wed Oct 17, 2018 1:07 pm
Perhaps someone will clarify:

I seem to be in a minority around here in that I do hold international stocks but I am also skeptical/unconvinced that it is going to better help me achieve my goals. I do not see myself removing this allocation but I also am not overly enthusiastic about having it, either.

So, how xenophobic does this position make me? Maybe not as xenophobic as someone who has chosen the 100% US route, but maybe just xenophobic enough to still be ashamed of myself for it? If those of you who are far more certain of your position than I am of mine can enlighten me I would appreciate it.
Here in the US "xenophobic" has a pretty bad connotation. Why do you classify others in that "category" so quickly because of their position? Why are you judging people so quickly? When you judge people with heavy words like that you are just provoking "bad" feelings in others that might think your "classification" is right, just because the word you used.
Are you asking me personally? I was putting the question to the forum members that were throwing around the xenophobic accusation.

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by patrick013 » Wed Oct 17, 2018 7:29 pm

If Intl pickups again there is nothing to stop an
investor from adding AA for it. The little spurt
of business activity enjoyed by Intl earlier in the
year seems to have died out. So until Intl puts
together some reliable annual returns I'm discouraged
again.

I don't like thinking I'm investing in this or not in that
for behavioral bias' but rather for dollars and cents.
Or for some reasonable diversification reason.
age in bonds, buy-and-hold, 10 year business cycle

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by staythecourse » Wed Oct 17, 2018 7:49 pm

JoMoney wrote:
Wed Oct 17, 2018 12:55 pm
-International stocks are riskier, and there certainly hasn't been data showing a "risk premium" associated with it
Here is the BIGGEST issue that makes no sense. Lets flip that argument around. So you are saying since it is SO OBVIOUS U.S. equities are safer it should be expected to return a better return then international? How does that fit with the very BASICS of financial theory. That is liking saying U.S. treasuries bonds are safer then U.S. corporate bonds and one expects a better return. That doesn't make sense either and no investor would expect it to be true. THERE ARE NO FREE LUNCHES. I would think that would be agreed by everyone on this board, but guess not in this debate.

Good luck.

p.s. I think there are long periods the returns of U.S. and international are the same as should be expected based on the volatility of returns being roughly the same. So no you are not correct that "international stock are riskier". NO ONE has said in ANY book I have EVER read that there should be a international equity premium. IF I am wrong please link the article or book.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by All Seasons » Wed Oct 17, 2018 8:16 pm

staythecourse wrote:
Wed Oct 17, 2018 7:49 pm
JoMoney wrote:
Wed Oct 17, 2018 12:55 pm
-International stocks are riskier, and there certainly hasn't been data showing a "risk premium" associated with it
Here is the BIGGEST issue that makes no sense. Lets flip that argument around. So you are saying since it is SO OBVIOUS U.S. equities are safer it should be expected to return a better return then international? How does that fit with the very BASICS of financial theory. That is liking saying U.S. treasuries bonds are safer then U.S. corporate bonds and one expects a better return. That doesn't make sense either and no investor would expect it to be true. THERE ARE NO FREE LUNCHES. I would think that would be agreed by everyone on this board, but guess not in this debate.

Good luck.

p.s. I think there are long periods the returns of U.S. and international are the same as should be expected based on the volatility of returns being roughly the same. So no you are not correct that "international stock are riskier". NO ONE has said in ANY book I have EVER read that there should be a international equity premium. IF I am wrong please link the article or book.
Precisely.

If you made an all-in bet on 100% U.S., you certainly "won" that bet. However, Bogle himself in some of the early material in Taylor's latest book has pointed out that that very easily could have just been luck as much as prescience.

Further, if you buy into the logic of U.S. superiority, it would be ultimate foolishness to somehow think that extra profit opportunity would not somehow be arbitraged away over time.

Another point to be made is to repeat something that Swedroe has had to point out -- which is how one defines "long-term" as far as statistical results are concerned. What one intuitively might say is long-term in investing is often nothing more than statistical noise. Recency bias then comes in very strongly.
The market portfolio is always a legitimate portfolio.

ScubaHogg
Posts: 44
Joined: Sun Nov 06, 2011 3:02 pm

Re: "Why Jack Bogle Doesn't Own Non-U.S. Stocks"

Post by ScubaHogg » Wed Oct 17, 2018 8:52 pm

samsdad wrote:
Wed Oct 17, 2018 10:07 am
So if I buy a share of Petróleo Brasileiro S.A.—Petrobras—a semi-public Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro, Brazil, I’m not transferring my wealth to the Brazilian government? Really? Where does the money go?
Unless it's a new issue it goes to the stockholder who sold it. Do you think if you buy a share of Walmart stock it goes straight to the corporate headquarters? If so, you are confused what the stock market is all about.

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