Why does anyone invest in international funds?

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watchnerd
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Re: Why does anyone invest in international funds?

Post by watchnerd »

visualguy wrote: Tue Mar 31, 2020 9:18 pm will miraculously put them ahead in the future.
For some of us, pulling ahead isn't the goal.

Holding global market weight, I will never, ever own the best country.

But nor will I ever own the worst country.

That's how I like it.
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Noobvestor
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Re: Why does anyone invest in international funds?

Post by Noobvestor »

visualguy wrote: Tue Mar 31, 2020 9:18 pm
wesgreen wrote: Tue Mar 31, 2020 8:22 pm I think in part because there's a lot of bad advice out there, by Vanguard and, unfortunately, even on this forum. Once you realize John Bogle was once again right, you get out of it. If you wait as long as I did, and are 100% equity, it can become a quite expensive lesson.
It's best not to get into it to begin with rather than struggling with a course change later, so it is indeed unfortunate when people fall into it either through target date funds, or reading some materials here. It has cost people dearly. Once you're invested in it for a while, it's hard to accept the mistake and change course, but a few here managed to make that correction rather than believing that indexing Europe, Japan, etc. will miraculously put them ahead in the future. There are certainly enough threads here now with good discussions for people who are researching this topic, so that's good.
So ... Vanguard is wrong, the market is wrong, Europe and Japan are doomed, the US is exceptional. Did I miss anything? Honestly, if you think the US has magical powers to outperform the world now and forever, leverage up - take out HELOCs, double-down, go all-in and shoot for the moon. There is no reason to take half-steps or go in with half-measures if you've got an angle on risk-free returns. Also: short international! :beer

P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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spdoublebass
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Re: Why does anyone invest in international funds?

Post by spdoublebass »

Noobvestor wrote: Wed Apr 01, 2020 3:38 am
P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
Don't say that too loud.... That other thread might hear it.....
I'm trying to think, but nothing happens
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Noobvestor
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Re: Why does anyone invest in international funds?

Post by Noobvestor »

spdoublebass wrote: Wed Apr 01, 2020 4:09 am
Noobvestor wrote: Wed Apr 01, 2020 3:38 am
P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
Don't say that too loud.... That other thread might hear it.....
I have been repeating it for close to a decade now, alas to little effect. It's hard to convince people that a decade isn't a lifetime.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
visualguy
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Re: Why does anyone invest in international funds?

Post by visualguy »

Noobvestor wrote: Wed Apr 01, 2020 4:10 am
spdoublebass wrote: Wed Apr 01, 2020 4:09 am
Noobvestor wrote: Wed Apr 01, 2020 3:38 am
P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
Don't say that too loud.... That other thread might hear it.....
I have been repeating it for close to a decade now, alas to little effect. It's hard to convince people that a decade isn't a lifetime.
Maybe to little effect because it has been an awful investment overall for a lifetime, and, if anything, Europe, Japan, etc. look even worse now - their stock markets have gone nowhere for reasons which haven't miraculously disappeared.
keelerjr12
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Re: Why does anyone invest in international funds?

Post by keelerjr12 »

Noobvestor wrote: Wed Apr 01, 2020 4:10 am
spdoublebass wrote: Wed Apr 01, 2020 4:09 am
Noobvestor wrote: Wed Apr 01, 2020 3:38 am
P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
Don't say that too loud.... That other thread might hear it.....
I have been repeating it for close to a decade now, alas to little effect. It's hard to convince people that a decade isn't a lifetime.
The mentality of “a decade isn’t a lifetime” doesn’t work for some people. I see a lot of people on here that have the mentality that 30 years doesn’t matter because they have an entire lifetime to invest. People that think they have 60 years to create their nest egg are closer to being incorrect than the people who believe they only have 20 years.

There’s 2 reasons this is flawed for some people. First, an accumulation phase isn’t as long as people think it is. I’ve seen people who thought they would work into their 60s quit in their 50s because they’re burned out, get laid off, medical, etc.

Next, do you really want to work into your 60s-70s so you can keep accumulating? Umm I sure don’t.... you may think you’re going to be healthy to travel, take up new hobbies, be physical etc. but I don’t believe that’s very realistic (at this point in time).

As Americans we do such a poor job of diversifying between life and work in our younger years. We devote our entire working lives to creating this nest egg. We don’t focus on the simple things. Our fitness goes to sh*t which then affects you later in life.

I think it’s much better to take on risk when you’re younger in hopes of having the OPTION to retire or change jobs in your 40s.
lostdog
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Re: Why does anyone invest in international funds?

Post by lostdog »

Peculiar_Investor wrote: Tue Mar 31, 2020 3:32 pm
Peculiar_Investor wrote: Fri Mar 27, 2020 8:16 am Are we getting close to the point where someone starts the Final, definitive topic on international investing.

It could be used to summarize the 738 (and counting) topics that already exist on the subject.

My take, just about everyone has a viewpoint, there is no consensus, and no-one seems to be changing their view based on what others have posted. Carry-on.
Oops. I forgot to include the "Personal Investments" forum, so I've updated the search criteria and we're now at 1660 (and counting) topics that already exist on the subject.

Definitely seems like someone should start the Final, definitive topic on international investing.

No wait, don't bother as it remains clear there is no consensus, and no-one seems to be changing their view based on what others have posted.

While researching an answer for another topic, I rediscovered Bogle's The Dream of A Perfect Plan keynote speech. For those using the US market outperforms argument, check out what Bogle says relying on past performance ...
Jack Bogle wrote:Rule 5: Beware of Past Performance to Predict Future Performance

For your dream of a perfect plan to be realized, you must select superior mutual funds. To an amazing extent, investors rely on past performance to make their selections. If you do so, I warn you, you are leaning on a weak reed. For there is simply no way of predicting a fund’s future success based on its past track record. Indeed, there is but one thing that appears certain about the future relative performance of successful funds: Their performance superiority will not be sustained. The profound tendency of yesterday’s top performing funds to become tomorrow’s below average funds is called “reversion to the mean”—a sort of law of gravity that seems to be almost universally applicable in the financial markets.

Mean reversion is not a statistical aberration. The returns of the top quartile funds during the 1960s fell from 5% above the stock market to below it in the 1970s. The top funds during the 1970s fell from 4.6% above the market to below it during the 1980s. And the top funds during the 1980s fell from 2.8% above the market to 1.6% below it during the 1990s. Reversion to the mean in fund performance seems not only consistent—a 4% to 5% reversion in each of those three cases—but almost preordained, frustrating the dreams of so many investors who invest on the basis of past returns.
+1

It's like talking to a wall.

These people have selective hearing. They take what Jack said as literal and throw everything else out the window.

They have past performance regret, switch to a US only portfolio and start touting "Jack was right, I should have listened!". They then think the US will outperform in future and forever. This just doesn't make any sense. Throwing logic out the window and then starts the idol worshipping.

When international outperforms do they just sit there with their head in the sand?

It's just performance chasing under the guise of Jack said so and simplicity.
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hisdudeness
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Re: Why does anyone invest in international funds?

Post by hisdudeness »

lostdog wrote: Wed Apr 01, 2020 7:48 am
Peculiar_Investor wrote: Tue Mar 31, 2020 3:32 pm
Peculiar_Investor wrote: Fri Mar 27, 2020 8:16 am Are we getting close to the point where someone starts the Final, definitive topic on international investing.

It could be used to summarize the 738 (and counting) topics that already exist on the subject.

My take, just about everyone has a viewpoint, there is no consensus, and no-one seems to be changing their view based on what others have posted. Carry-on.
Oops. I forgot to include the "Personal Investments" forum, so I've updated the search criteria and we're now at 1660 (and counting) topics that already exist on the subject.

Definitely seems like someone should start the Final, definitive topic on international investing.

No wait, don't bother as it remains clear there is no consensus, and no-one seems to be changing their view based on what others have posted.

While researching an answer for another topic, I rediscovered Bogle's The Dream of A Perfect Plan keynote speech. For those using the US market outperforms argument, check out what Bogle says relying on past performance ...
Jack Bogle wrote:Rule 5: Beware of Past Performance to Predict Future Performance

For your dream of a perfect plan to be realized, you must select superior mutual funds. To an amazing extent, investors rely on past performance to make their selections. If you do so, I warn you, you are leaning on a weak reed. For there is simply no way of predicting a fund’s future success based on its past track record. Indeed, there is but one thing that appears certain about the future relative performance of successful funds: Their performance superiority will not be sustained. The profound tendency of yesterday’s top performing funds to become tomorrow’s below average funds is called “reversion to the mean”—a sort of law of gravity that seems to be almost universally applicable in the financial markets.

Mean reversion is not a statistical aberration. The returns of the top quartile funds during the 1960s fell from 5% above the stock market to below it in the 1970s. The top funds during the 1970s fell from 4.6% above the market to below it during the 1980s. And the top funds during the 1980s fell from 2.8% above the market to 1.6% below it during the 1990s. Reversion to the mean in fund performance seems not only consistent—a 4% to 5% reversion in each of those three cases—but almost preordained, frustrating the dreams of so many investors who invest on the basis of past returns.
+1

It's like talking to a wall.

These people have selective hearing. They take what Jack said as literal and throw everything else out the window.

They have past performance regret, switch to a US only portfolio and start touting "Jack was right, I should have listened!". They then think the US will outperform in future and forever. This just doesn't make any sense. Throwing logic out the window and then starts the idol worshipping.

When international outperforms do they just sit there with their head in the sand?

It's just performance chasing under the guise of Jack said so and simplicity.
Wow.
I'm one of "these people" that just won't listen to your wisdom. I think you covered all the usual talking points, except hand-wringing. I read it twice, and did not see hand-wringing.
Seriously, you probably should have been a less risky AA. Relax.
:sharebeer
lostdog
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Re: Why does anyone invest in international funds?

Post by lostdog »

hisdudeness wrote: Wed Apr 01, 2020 10:23 am
lostdog wrote: Wed Apr 01, 2020 7:48 am
Peculiar_Investor wrote: Tue Mar 31, 2020 3:32 pm
Peculiar_Investor wrote: Fri Mar 27, 2020 8:16 am Are we getting close to the point where someone starts the Final, definitive topic on international investing.

It could be used to summarize the 738 (and counting) topics that already exist on the subject.

My take, just about everyone has a viewpoint, there is no consensus, and no-one seems to be changing their view based on what others have posted. Carry-on.
Oops. I forgot to include the "Personal Investments" forum, so I've updated the search criteria and we're now at 1660 (and counting) topics that already exist on the subject.

Definitely seems like someone should start the Final, definitive topic on international investing.

No wait, don't bother as it remains clear there is no consensus, and no-one seems to be changing their view based on what others have posted.

While researching an answer for another topic, I rediscovered Bogle's The Dream of A Perfect Plan keynote speech. For those using the US market outperforms argument, check out what Bogle says relying on past performance ...
Jack Bogle wrote:Rule 5: Beware of Past Performance to Predict Future Performance

For your dream of a perfect plan to be realized, you must select superior mutual funds. To an amazing extent, investors rely on past performance to make their selections. If you do so, I warn you, you are leaning on a weak reed. For there is simply no way of predicting a fund’s future success based on its past track record. Indeed, there is but one thing that appears certain about the future relative performance of successful funds: Their performance superiority will not be sustained. The profound tendency of yesterday’s top performing funds to become tomorrow’s below average funds is called “reversion to the mean”—a sort of law of gravity that seems to be almost universally applicable in the financial markets.

Mean reversion is not a statistical aberration. The returns of the top quartile funds during the 1960s fell from 5% above the stock market to below it in the 1970s. The top funds during the 1970s fell from 4.6% above the market to below it during the 1980s. And the top funds during the 1980s fell from 2.8% above the market to 1.6% below it during the 1990s. Reversion to the mean in fund performance seems not only consistent—a 4% to 5% reversion in each of those three cases—but almost preordained, frustrating the dreams of so many investors who invest on the basis of past returns.
+1

It's like talking to a wall.

These people have selective hearing. They take what Jack said as literal and throw everything else out the window.

They have past performance regret, switch to a US only portfolio and start touting "Jack was right, I should have listened!". They then think the US will outperform in future and forever. This just doesn't make any sense. Throwing logic out the window and then starts the idol worshipping.

When international outperforms do they just sit there with their head in the sand?

It's just performance chasing under the guise of Jack said so and simplicity.
Wow.
I'm one of "these people" that just won't listen to your wisdom. I think you covered all the usual talking points, except hand-wringing. I read it twice, and did not see hand-wringing.
Seriously, you probably should have been a less risky AA. Relax.
:sharebeer
No problem. Always relaxed. :sharebeer

Anytime I can save at least one beginner investor from making a huge mistake, the better. I'll save them from the "hand wringing"... :D

How many of your posts get deleted?
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hisdudeness
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Re: Why does anyone invest in international funds?

Post by hisdudeness »

Duplicate, deleted by hisdudeness, not the moderators
rustymutt
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Re: Why does anyone invest in international funds?

Post by rustymutt »

During the bear market of 2000, through 2003, the only fund for me that made money was a European developed markets funds. So it helped balance my US losses, with otherwise would have devastated my returns overtime. But in certain bear markets that's not the case, as currently the whole world is suffering from this virus. That's my two cents worth the understanding. It simply broadens your diversity with what is considered opposing factors of correlation.

:greedy
Even educators need education. And some can be hard headed to the point of needing time out.
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watchnerd
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Re: Why does anyone invest in international funds?

Post by watchnerd »

rustymutt wrote: Wed Apr 01, 2020 10:43 am During the bear market of 2000, through 2003, the only fund for me that made money was a European developed markets funds. So it helped balance my US losses, with otherwise would have devastated my returns overtime. But in certain bear markets that's not the case, as currently the whole world is suffering from this virus. That's my two cents worth the understanding. It simply broadens your diversity with what is considered opposing factors of correlation.

:greedy
Dollar decline was / is the other hedge international provided during that time / can provide in the future.
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rustymutt
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Re: Why does anyone invest in international funds?

Post by rustymutt »

watchnerd wrote: Wed Apr 01, 2020 10:44 am
rustymutt wrote: Wed Apr 01, 2020 10:43 am During the bear market of 2000, through 2003, the only fund for me that made money was a European developed markets funds. So it helped balance my US losses, with otherwise would have devastated my returns overtime. But in certain bear markets that's not the case, as currently the whole world is suffering from this virus. That's my two cents worth the understanding. It simply broadens your diversity with what is considered opposing factors of correlation.

:greedy
Dollar decline was / is the other hedge international provided during that time / can provide in the future.
Yes, I recall now that it was dollar weakness that drove that increase now that you mention it. And it could repeat with all the new government spending printed dollars at home.
Even educators need education. And some can be hard headed to the point of needing time out.
chevca
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Re: Why does anyone invest in international funds?

Post by chevca »

Noobvestor wrote: Wed Apr 01, 2020 4:10 am
spdoublebass wrote: Wed Apr 01, 2020 4:09 am
Noobvestor wrote: Wed Apr 01, 2020 3:38 am
P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
Don't say that too loud.... That other thread might hear it.....
I have been repeating it for close to a decade now, alas to little effect. It's hard to convince people that a decade isn't a lifetime.
So, as long as they think it through for themselves, people are right weather they choose to hold international or US only according to Jack, right? Or, are they only right if they listen to you? :wink:
justglassin
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Re: Why does anyone invest in international funds?

Post by justglassin »

I always read these threads and still come down on the global market-weight side of the equation.

However, if I could go back and change one thing it would have been to have NEVER put all my Roth into VTIAX while leaving my TSP in C, S, and G funds to achieve a balanced allocation across my total portfolio. I did this at the time after some advice on this board on how I might set up a three fund between my TSP and Vanguard.

Now my TSP has seen great gains, whereas my Roth has barely moved in 6 years despite consistent contributions and that one year of out-performance in international in 2017. In hindsight I would have just set my Roth on the most aggressive 3-fund (2-fund, actually) I could there and accept that I wouldn't hold emerging markets with international in my TSP until they/when they add emergning markets to the I fund.

If anyone has some thoughts on how to perhaps get this situation corrected, I'm all ears.

My 2020 contribution to ROTH is still in cash/MmKt, thankfully. Right now I am carefully DCA'ing into VTSAX. Should I just say to hell with it now and move to a total equity approach now? Sell out of some VTIAX and into VTSAX until I'm about 45% VTIAX and 55% VTSAX?

I'm early forties and in a stable federal job situation.
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backofbeyond
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Re: Why does anyone invest in international funds?

Post by backofbeyond »

Diversification

Firmly believe Asia (read China and S. Korea) are the future.
Emerging Markets are hit and miss, but I do dabble in them.
While I do have some money in European stocks/ETFs, they will struggle to compete with the either the US or Asia in the years to come. Why? In one word: socialism
The question isn't at what age I want to retire, it is at what income. - George Foreman
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spdoublebass
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Re: Why does anyone invest in international funds?

Post by spdoublebass »

chevca wrote: Wed Apr 01, 2020 10:55 am
Noobvestor wrote: Wed Apr 01, 2020 4:10 am
spdoublebass wrote: Wed Apr 01, 2020 4:09 am
Noobvestor wrote: Wed Apr 01, 2020 3:38 am
P.S. Jack Bogle was right - I completely agree with what he said: "If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." I was there, in person, when he said it. viewtopic.php?t=104781
Don't say that too loud.... That other thread might hear it.....
I have been repeating it for close to a decade now, alas to little effect. It's hard to convince people that a decade isn't a lifetime.
So, as long as they think it through for themselves, people are right weather they choose to hold international or US only according to Jack, right? Or, are they only right if they listen to you? :wink:

My comment was made because when I read certain threads about Bogle and US only....it reads to me like they need those threads to stay the course. Which is fine, I guess, but some of those people have a long time ahead of them.

Imagine a 40 year old only who needs support now, after a long US bull, to stay the course on US only and relies on those threads. Do you think in 2065, when they are 85, they will be any more confident? Do you think the world will be the same? US as strong? I don't know personally. I also think that if they need those types of group threads, then they will be in trouble in 2065 relying on Bogle quotes from 1990, especially when they factor in all his quotes which say the above mentioned quote.
I'm trying to think, but nothing happens
chevca
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Re: Why does anyone invest in international funds?

Post by chevca »

So, no one knows, right?

It's just as wrong to cram international down folks' throat like the HAVE TO have it. To each their own.
asif408
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Re: Why does anyone invest in international funds?

Post by asif408 »

justglassin wrote: Wed Apr 01, 2020 11:23 am Now my TSP has seen great gains, whereas my Roth has barely moved in 6 years despite consistent contributions and that one year of out-performance in international in 2017. In hindsight I would have just set my Roth on the most aggressive 3-fund (2-fund, actually) I could there and accept that I wouldn't hold emerging markets with international in my TSP until they/when they add emergning markets to the I fund.

If anyone has some thoughts on how to perhaps get this situation corrected, I'm all ears.

My 2020 contribution to ROTH is still in cash/MmKt, thankfully. Right now I am carefully DCA'ing into VTSAX. Should I just say to hell with it now and move to a total equity approach now? Sell out of some VTIAX and into VTSAX until I'm about 45% VTIAX and 55% VTSAX?

I'm early forties and in a stable federal job situation.
Seems odd you base a decision on 6 years of performance and you are only in your 40s and have 20+ years of investing left. You do realize there have been several 6 year periods where international has outperformed the US? And wouldn't it be ironic if you moved half of your Roth out of VTIAX and it goes on to outperform VTSAX in the next 6 years? Personally, I'd just wait it out, but that's just me.
justglassin
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Re: Why does anyone invest in international funds?

Post by justglassin »

asif408 wrote: Wed Apr 01, 2020 12:23 pm
justglassin wrote: Wed Apr 01, 2020 11:23 am Now my TSP has seen great gains, whereas my Roth has barely moved in 6 years despite consistent contributions and that one year of out-performance in international in 2017. In hindsight I would have just set my Roth on the most aggressive 3-fund (2-fund, actually) I could there and accept that I wouldn't hold emerging markets with international in my TSP until they/when they add emergning markets to the I fund.

If anyone has some thoughts on how to perhaps get this situation corrected, I'm all ears.

My 2020 contribution to ROTH is still in cash/MmKt, thankfully. Right now I am carefully DCA'ing into VTSAX. Should I just say to hell with it now and move to a total equity approach now? Sell out of some VTIAX and into VTSAX until I'm about 45% VTIAX and 55% VTSAX?

I'm early forties and in a stable federal job situation.
Seems odd you base a decision on 6 years of performance and you are only in your 40s and have 20+ years of investing left. You do realize there have been several 6 year periods where international has outperformed the US? And wouldn't it be ironic if you moved half of your Roth out of VTIAX and it goes on to outperform VTSAX in the next 6 years? Personally, I'd just wait it out, but that's just me.
Thanks! Yeah, that 6 years is a short period of time is not lost on me and that's why I've tolerated this arrangement and still do.

I just don't like the idea of having one retirement account entirely invested in a single, ex-US fund simply to plug some gaps in my other plan (emerging markets) and ease of re-balancing. Would it not make more sense to hold a two or three-fund within each account, recognizing that at this time the TSP I fund doesn't include emerging international? I guess I'm just looking for someone to validate that as a concern for others to consider; I don't feel like it makes sense to go "all in" with a single sector or region in on of your accounts...feels like it puts the Roth account and its unique benefits (tax free withdrawal) at geographic risk. Why introduce that kind of bias to a specific account, even if you are balanced across your overall portfolio?
asif408
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Re: Why does anyone invest in international funds?

Post by asif408 »

justglassin wrote: Wed Apr 01, 2020 12:47 pm I just don't like the idea of having one retirement account entirely invested in a single, ex-US fund simply to plug some gaps in my other plan (emerging markets) and ease of re-balancing. Would it not make more sense to hold a two or three-fund within each account, recognizing that at this time the TSP I fund doesn't include emerging international? I guess I'm just looking for someone to validate that as a concern for others to consider; I don't feel like it makes sense to go "all in" with a single sector or region in on of your accounts...feels like it puts the Roth account and its unique benefits (tax free withdrawal) at geographic risk. Why introduce that kind of bias to a specific account, even if you are balanced across your overall portfolio?
If it makes you feel better you could do that. I did that with my accounts initially, but after some advice from posters here (like you) I came to the conclusion that the simplicity of having as few accounts and few funds as possible outweighed the other factors, plus I was able to take advantage of the lowest expense ratios.

Sure, it would be nice to have the highest returning asset in the Roth; the problem is, over a 20+ year time period its hard to know what will do the best. Sure, stocks will probably beat bonds, but it's challenging to predict which asset class will be higher in the next 20-30 years, especially among equity asset classes. All I know from history is, generally speaking, it's been very rare for an individual country that has been the best performer over the past 20-30 years to be the same one in the following 20-30 years. So if I was betting on the odds I would rather not have my Roth concentrated in one country (i.e., the US), even though it has outperformed most other markets over the last century or so and particularly in the last decade. I'd be much more concerned about geographic risk in a fund that is only invested in one country, no matter what country that is.

A compromise might be to hold a total world fund in the Roth and then balance out your preferred US/Int'l allocation in the TSP.
justglassin
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Re: Why does anyone invest in international funds?

Post by justglassin »

asif408 wrote: Wed Apr 01, 2020 1:45 pm
justglassin wrote: Wed Apr 01, 2020 12:47 pm I just don't like the idea of having one retirement account entirely invested in a single, ex-US fund simply to plug some gaps in my other plan (emerging markets) and ease of re-balancing. Would it not make more sense to hold a two or three-fund within each account, recognizing that at this time the TSP I fund doesn't include emerging international? I guess I'm just looking for someone to validate that as a concern for others to consider; I don't feel like it makes sense to go "all in" with a single sector or region in on of your accounts...feels like it puts the Roth account and its unique benefits (tax free withdrawal) at geographic risk. Why introduce that kind of bias to a specific account, even if you are balanced across your overall portfolio?
If it makes you feel better you could do that. I did that with my accounts initially, but after some advice from posters here (like you) I came to the conclusion that the simplicity of having as few accounts and few funds as possible outweighed the other factors, plus I was able to take advantage of the lowest expense ratios.

Sure, it would be nice to have the highest returning asset in the Roth; the problem is, over a 20+ year time period its hard to know what will do the best. Sure, stocks will probably beat bonds, but it's challenging to predict which asset class will be higher in the next 20-30 years, especially among equity asset classes. All I know from history is, generally speaking, it's been very rare for an individual country that has been the best performer over the past 20-30 years to be the same one in the following 20-30 years. So if I was betting on the odds I would rather not have my Roth concentrated in one country (i.e., the US), even though it has outperformed most other markets over the last century or so and particularly in the last decade. I'd be much more concerned about geographic risk in a fund that is only invested in one country, no matter what country that is.

A compromise might be to hold a total world fund in the Roth and then balance out your preferred US/Int'l allocation in the TSP.
This is great food for thought. Much appreciated and good luck!
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Re: Why does anyone invest in international funds?

Post by UpsetRaptor »

chevca wrote: Wed Apr 01, 2020 12:03 pm So, no one knows, right?

It's just as wrong to cram international down folks' throat like they HAVE TO have it. To each their own.
+1

For all the gnashing, just about any answer is actually fine. 100% US is fine, global cap is fine, 50/50 is fine. It's just about diversification level, and in reality, they all have enough.

I'm a 100% US guy, but I'm not trying to cram that down anyone's throat. I'm just smiling along with my superior returns. :D
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Re: Why does anyone invest in international funds?

Post by birdog »

UpsetRaptor wrote: Wed Apr 01, 2020 2:11 pm
chevca wrote: Wed Apr 01, 2020 12:03 pm So, no one knows, right?

It's just as wrong to cram international down folks' throat like they HAVE TO have it. To each their own.
+1

For all the gnashing, just about any answer is actually fine. 100% US is fine, global cap is fine, 50/50 is fine. It's just about diversification level, and in reality, they all have enough.

I'm a 100% US guy, but I'm not trying to cram that down anyone's throat. I'm just smiling along with my superior returns. :D

+1 more. :D
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Re: Why does anyone invest in international funds?

Post by Triple digit golfer »

I'm at 32% of equities in international. IPS calls for 30% (don't ask how I got 2% high, it was a little boo boo).

Thinking of biting the bullet and bumping to 40%. U.S. has outperformed basically my entire investing lifetime, so I really don't see much of a risk. If U.S. continues to outperform, fine. I'm still ahead of where I would have been had I been 40% international all along. And if international outperforms after I bump it, great!
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Re: Why does anyone invest in international funds?

Post by asif408 »

UpsetRaptor wrote: Wed Apr 01, 2020 2:11 pm For all the gnashing, just about any answer is actually fine. 100% US is fine, global cap is fine, 50/50 is fine. It's just about diversification level, and in reality, they all have enough.

I'm a 100% US guy, but I'm not trying to cram that down anyone's throat. I'm just smiling along with my superior returns. :D
I'm a 90% international guy, but not trying to cram that down anyone's throat. I'm just dreaming of the day I can smile with my superior returns and can see the sad faces of the US only crowd who start getting a bad case of FOMO.
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Re: Why does anyone invest in international funds?

Post by UpsetRaptor »

asif408 wrote: Wed Apr 01, 2020 3:29 pm
UpsetRaptor wrote: Wed Apr 01, 2020 2:11 pm For all the gnashing, just about any answer is actually fine. 100% US is fine, global cap is fine, 50/50 is fine. It's just about diversification level, and in reality, they all have enough.

I'm a 100% US guy, but I'm not trying to cram that down anyone's throat. I'm just smiling along with my superior returns. :D
I'm a 90% international guy, but not trying to cram that down anyone's throat. I'm just dreaming of the day I can smile with my superior returns and can see the sad faces of the US only crowd who start getting a bad case of FOMO.
Cheers, my friend. Ain't gonna lie, it feels nice.

It'll almost certainly happen sometime, for some time period. Then it'll almost certainly go back, for some time period. And so on and so forth.
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Re: Why does anyone invest in international funds?

Post by ImmigrantSaver »

Triple digit golfer wrote: Wed Apr 01, 2020 3:27 pm I'm at 32% of equities in international. IPS calls for 30% (don't ask how I got 2% high, it was a little boo boo).

Thinking of biting the bullet and bumping to 40%. U.S. has outperformed basically my entire investing lifetime, so I really don't see much of a risk. If U.S. continues to outperform, fine. I'm still ahead of where I would have been had I been 40% international all along. And if international outperforms after I bump it, great!
This is how I look at my global (55/45) allocation portfolio: if US outperforms, “I have more than half in it! Yey!” If International outperforms, “I have almost half in it! Yey!”
:sharebeer
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Re: Why does anyone invest in international funds?

Post by Noobvestor »

chevca wrote: Wed Apr 01, 2020 12:03 pm So, no one knows, right?

It's just as wrong to cram international down folks' throat like the HAVE TO have it. To each their own.
Global indexing is a neutral starting point. I'm not trying to cram anything down anyone's throats, just point out the obvious. People can and should deviate from defaults for good reasons, not start at a non-default point like US-only. Want to tilt US? Sure, just have solid reasons.

I am a dog with a bone on this front because I don't think people get that single-market risk is real. It has showed up at various times and in various places, including emerging and developed markets. It could show up here. Lots of reasons these days to think it might.

If I had to guess - and to be clear, I'm not acting on this guess - I would guess international has a better shot at higher returns this decade than US-only. Vanguard's 2020 whitepaper agrees with me. How it will turn out, no one knows, so I remain neutral at around market weights.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Why does anyone invest in international funds?

Post by visualguy »

backofbeyond wrote: Wed Apr 01, 2020 11:52 am Diversification

Firmly believe Asia (read China and S. Korea) are the future.
Emerging Markets are hit and miss, but I do dabble in them.
While I do have some money in European stocks/ETFs, they will struggle to compete with the either the US or Asia in the years to come. Why? In one word: socialism
Yeah, but how do you make money on China and S. Korea? Indexing their stock markets doesn't work because the nature of their economies, corporate structures and control, and stock markets is very different from what we have here in the US. The returns on indexing their stock markets have been abysmal even with all the growth and success of their economies. It doesn't provide a good way to participate in their rise, and doesn't reflect their success.
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Re: Why does anyone invest in international funds?

Post by vineviz »

Noobvestor wrote: Wed Apr 01, 2020 4:18 pm I am a dog with a bone on this front because I don't think people get that single-market risk is real. It has showed up at various times and in various places, including emerging and developed markets. It could show up here. Lots of reasons these days to think it might.
"Single-market risk" has even shown up for U.S. stocks, multiple times over the past few decades. That some people don't understand the is mind-Bogleing.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Why does anyone invest in international funds?

Post by vineviz »

visualguy wrote: Wed Apr 01, 2020 4:50 pm Yeah, but how do you make money on China and S. Korea?
Maybe like this?

Image

link
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Why does anyone invest in international funds?

Post by Noobvestor »

vineviz wrote: Wed Apr 01, 2020 5:37 pm
visualguy wrote: Wed Apr 01, 2020 4:50 pm Yeah, but how do you make money on China and S. Korea?
Maybe like this?

Image

link
:shock: :D :sharebeer :arrow: :moneybag
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visualguy
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Re: Why does anyone invest in international funds?

Post by visualguy »

China has seen tremendous growth over the last decade, yet the return on FXI (iShares China) has been a miserable 2.79%. For S. Korea, the return on EWY has been 3.46%. SPY (S&P 500) has been 12.57%.

Their economies and companies can do extremely well, yet this is not reflected in indexing their stock markets.
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Re: Why does anyone invest in international funds?

Post by mrwalken »

I have invested in VEU and VSS for over a decade. Considering they are both near all-time lows for the history of the ETFs, I assume the answer to your question must be tax loss harvesting.
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Re: Why does anyone invest in international funds?

Post by asif408 »

visualguy wrote: Wed Apr 01, 2020 4:50 pm
backofbeyond wrote: Wed Apr 01, 2020 11:52 am Diversification

Firmly believe Asia (read China and S. Korea) are the future.
Emerging Markets are hit and miss, but I do dabble in them.
While I do have some money in European stocks/ETFs, they will struggle to compete with the either the US or Asia in the years to come. Why? In one word: socialism
Yeah, but how do you make money on China and S. Korea? Indexing their stock markets doesn't work because the nature of their economies, corporate structures and control, and stock markets is very different from what we have here in the US. The returns on indexing their stock markets have been abysmal even with all the growth and success of their economies. It doesn't provide a good way to participate in their rise, and doesn't reflect their success.
Looks like South Korea has had slightly better returns than the US since the first South Korea fund (inception 2000): https://www.portfoliovisualizer.com/bac ... ion2_2=100

It's been ahead of the US fund from 2002 to present. That a long 18 year period of "abysmal" returns.
Last edited by asif408 on Thu Apr 02, 2020 7:39 am, edited 1 time in total.
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Re: Why does anyone invest in international funds?

Post by Random Walker »

Because I believe markets are highly efficient.

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Re: Why does anyone invest in international funds?

Post by patrick »

asif408 wrote: Wed Apr 01, 2020 3:29 pm I'm a 90% international guy, but not trying to cram that down anyone's throat. I'm just dreaming of the day I can smile with my superior returns and can see the sad faces of the US only crowd who start getting a bad case of FOMO.
Superior international returns have happened over the last two weeks. From March 18, 2020 through April 1, 2020:

+3.57% VTSAX Vanguard Total [US] Stock Market
+8.24% VTIAX Vanguard Total International Stock Market

But then again, maybe the US stock market will catch up before the US only crowd notices. Maybe.
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Re: Why does anyone invest in international funds?

Post by keelerjr12 »

Part of the reason I don't care much for international (besides it lagging for the last 20+ years) is I don't trust other countries (e.g. China). Sure there is definitely the upside, but I think there is a much higher downside.
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Re: Why does anyone invest in international funds?

Post by watchnerd »

keelerjr12 wrote: Thu Apr 02, 2020 8:36 am Part of the reason I don't care much for international (besides it lagging for the last 20+ years) is I don't trust other countries (e.g. China). Sure there is definitely the upside, but I think there is a much higher downside.
Canada, Australia, Switzerland....all untrustworthy?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
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Re: Why does anyone invest in international funds?

Post by birdog »

patrick wrote: Thu Apr 02, 2020 8:25 am Superior international returns have happened over the last two weeks. From March 18, 2020 through April 1, 2020:
Two weeks? I don't think the case for international performance is bolstered by their proponents highlighting two week periods of time where international outperforms US-only. Thank goodness my investing horizon extends beyond two weeks. Over time periods that matter, international lags US-only.
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Re: Why does anyone invest in international funds?

Post by lostdog »

birdog wrote: Thu Apr 02, 2020 8:40 am
patrick wrote: Thu Apr 02, 2020 8:25 am Superior international returns have happened over the last two weeks. From March 18, 2020 through April 1, 2020:
Two weeks? I don't think the case for international performance is bolstered by their proponents highlighting two week periods of time where international outperforms US-only. Thank goodness my investing horizon extends beyond two weeks. Over time periods that matter, international lags US-only.
What about the future?
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Re: Why does anyone invest in international funds?

Post by keelerjr12 »

watchnerd wrote: Thu Apr 02, 2020 8:39 am
keelerjr12 wrote: Thu Apr 02, 2020 8:36 am Part of the reason I don't care much for international (besides it lagging for the last 20+ years) is I don't trust other countries (e.g. China). Sure there is definitely the upside, but I think there is a much higher downside.
Canada, Australia, Switzerland....all untrustworthy?
Outside of the FVEY, no I don't...
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Re: Why does anyone invest in international funds?

Post by birdog »

lostdog wrote: Thu Apr 02, 2020 8:48 am
birdog wrote: Thu Apr 02, 2020 8:40 am
patrick wrote: Thu Apr 02, 2020 8:25 am Superior international returns have happened over the last two weeks. From March 18, 2020 through April 1, 2020:
Two weeks? I don't think the case for international performance is bolstered by their proponents highlighting two week periods of time where international outperforms US-only. Thank goodness my investing horizon extends beyond two weeks. Over time periods that matter, international lags US-only.
What about the future?
We both know that no one knows the future. And the comment I was responding to was about the past. The past two weeks to be exact!
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Re: Why does anyone invest in international funds?

Post by UpsetRaptor »

lostdog wrote: Thu Apr 02, 2020 8:48 am
birdog wrote: Thu Apr 02, 2020 8:40 am
patrick wrote: Thu Apr 02, 2020 8:25 am Superior international returns have happened over the last two weeks. From March 18, 2020 through April 1, 2020:
Two weeks? I don't think the case for international performance is bolstered by their proponents highlighting two week periods of time where international outperforms US-only. Thank goodness my investing horizon extends beyond two weeks. Over time periods that matter, international lags US-only.
What about the future?
Personally, I don't really see any reason to believe the future will look much different from the past.
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Re: Why does anyone invest in international funds?

Post by vineviz »

birdog wrote: Thu Apr 02, 2020 8:52 am We both know that no one knows the future. And the comment I was responding to was about the past. The past two weeks to be exact!
Remember, though, if you are a true believer in US-only portfolios that not ALL past periods matter. Just the ones in which US outperformed ex-US. The majority of past periods must ALSO be ignored, because the international outperformance during THOSE periods does not matter.

We wouldn't want anyone looking at all the available data and concluding that international diversification might have some merit.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Why does anyone invest in international funds?

Post by keelerjr12 »

vineviz wrote: Thu Apr 02, 2020 9:26 am
birdog wrote: Thu Apr 02, 2020 8:52 am We both know that no one knows the future. And the comment I was responding to was about the past. The past two weeks to be exact!
Remember, though, if you are a true believer in US-only portfolios that not ALL past periods matter. Just the ones in which US outperformed ex-US. The majority of past periods must ALSO be ignored, because the international outperformance during THOSE periods does not matter.

We wouldn't want anyone looking at all the available data and concluding that international diversification might have some merit.
According to the data I pulled from FRED and MSCI, it's a 50% probability over the last 50 years that EAFE outperforms W5000 (and vice-versa). The expected value using this results in about .5% higher return if you just held VTI over VTI + VXUS (at a 50/50 holding). However, the Sharp ratio is much better by just holding VTI (due to the higher std dev of VXUS).
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Re: Why does anyone invest in international funds?

Post by birdog »

vineviz wrote: Thu Apr 02, 2020 9:26 am
birdog wrote: Thu Apr 02, 2020 8:52 am We both know that no one knows the future. And the comment I was responding to was about the past. The past two weeks to be exact!
Remember, though, if you are a true believer in US-only portfolios that not ALL past periods matter. Just the ones in which US outperformed ex-US. The majority of past periods must ALSO be ignored, because the international outperformance during THOSE periods does not matter.

We wouldn't want anyone looking at all the available data and concluding that international diversification might have some merit.
That's because if you look at all the available data it's very doubtful you'd come to that conclusion. Over the past (nearly) 50 years, from 1971 through October 2019, the S&P 500 has annualized returns of 10.6% per year, beating out the MSCI EAFE index by 1.6% per year. 1.6% per year is a devastating difference. For example, if you'd invested $10K fifty years ago, at 10.6% you'd have over $2M today. At 1.6% less per year you'd have under $900K today. That's just the past 50 years. If you go back further the performance difference gets even worse for international.
Last edited by birdog on Thu Apr 02, 2020 9:40 am, edited 2 times in total.
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Re: Why does anyone invest in international funds?

Post by keelerjr12 »

vineviz wrote: Thu Apr 02, 2020 9:26 am
birdog wrote: Thu Apr 02, 2020 8:52 am We both know that no one knows the future. And the comment I was responding to was about the past. The past two weeks to be exact!
Remember, though, if you are a true believer in US-only portfolios that not ALL past periods matter. Just the ones in which US outperformed ex-US. The majority of past periods must ALSO be ignored, because the international outperformance during THOSE periods does not matter.

We wouldn't want anyone looking at all the available data and concluding that international diversification might have some merit.
There is some diversification benefit.. only with a holding of about 5% though.
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Re: Why does anyone invest in international funds?

Post by vineviz »

birdog wrote: Thu Apr 02, 2020 9:36 am
vineviz wrote: Thu Apr 02, 2020 9:26 am
birdog wrote: Thu Apr 02, 2020 8:52 am We both know that no one knows the future. And the comment I was responding to was about the past. The past two weeks to be exact!
Remember, though, if you are a true believer in US-only portfolios that not ALL past periods matter. Just the ones in which US outperformed ex-US. The majority of past periods must ALSO be ignored, because the international outperformance during THOSE periods does not matter.

We wouldn't want anyone looking at all the available data and concluding that international diversification might have some merit.
That's because if you look at all the available data it's very doubtful you'd come to that conclusion. Over the past (nearly) 50 years, from 1971 through October 2019, the S&P 500 has annualized returns of 10.6% per year, beating out the MSCI EAFE index by 1.6% per year. 1.6% per year is a devastating difference. For example, if you'd invested $10K fifty years ago, at 10.6% you'd have over $2M today. At 1.6% less per year you'd have under $900K today. That's just the past 50 years. If you go back further the performance difference gets even worse for international.
Yes, absolutely we must only look at data that supports the conclusion we want to reach.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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