International stocks are undervalued!

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jhsu802701
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International stocks are undervalued!

Post by jhsu802701 »

I'm surprised that hardly anyone is talking about international investing, even among value investors. International stocks are as undervalued as US stocks were in 1974 and 1982. After you take the undervalued currencies into account, they're as undervalued as US stocks were in the 1930s. Right now, the "Buy American" brigade has no room for value investors.

Just check out these price/book ratios of these well-diversified international stock ETFs (according to Morningstar):
1. DFJ (WisdomTree Japan SmallCap Dividend ETF): 0.71
2. DGS (WisdomTree Emerging Markets SmCp Div ETF): 0.78
3. FNDC (Schwab Fundamental Intl Sm Co ETF): 0.82
4. GWX (SPDR® S&P International Small Cap ETF): 0.84
5. IQIN (IQ 500 International ETF): 0.94
6. MOTI (VanEck Vectors Morningstar Intl Moat ETF): 0.94 (while owning the kinds of stocks that merit higher multiples)
7. DGRE (WisdomTree Emerging Mkts Qual Div Gr ETF): 1.33 (while owning the kinds of stocks that merit higher multiples)

By comparison, US stock ETFs sell for MUCH higher multiples. Check out these price/book ratios from Morningstar:
1. VOO (Vanguard S&P 500 ETF): 2.58
2. MOAT (VanEck Vectors Morningstar Wide Moat ETF): 2.63, nearly triple the multiple of MOTI (0.94)
3. VTI (Vanguard Total Stock Market ETF): 2.76
4. DGRW (WisdomTree US Quality Dividend Gr ETF): 3.67, nearly triple the multiple of DGRE (1.33)

Because the US dollar has been strengthening for most of the past several years, all but two currencies are currently undervalued according to the Big Mac Index. Asian currencies are particularly cheap.

This is an unprecedented opportunity for the small investor. Not only are the stocks and currencies undervalued, there are so many international stock ETFs that didn't exist 10 or 20 years ago. Vanguard Brokerage now offers commission-free trading of stocks and ETFs, which is a boon for small investors and for thinly-traded securities (like MOTI and DGRE).
Last edited by jhsu802701 on Tue Jan 12, 2021 7:38 pm, edited 2 times in total.
JiggyWillis
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Re: International stocks are undervalued!

Post by JiggyWillis »

I thought so too when I looked at the 10yr chart for VFWAX today. Price is where it was at the bottom of the Asian Contagion thing in 2015. I bought a little today. Heard a talking head today say he was moving his clients out of international because there was no need now that US stocks are so cheap! Whatever.
rascott
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Re: International stocks are undervalued!

Post by rascott »

Price to book is an irrelevant metric today, IMO.
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Re: International stocks are undervalued!

Post by Peculiar_Investor »

jhsu802701 wrote: Fri Apr 03, 2020 3:10 pm I'm surprised that hardly anyone is talking about international investing, even among value investors.
Welcome to the Bogleheads community. Since you are new here, perhaps you haven't seen the 290+ posts on the viewtopic.php?f=10&t=309392 topic. One of them is this one:
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.
This topic increments the count.
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MotoTrojan
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Re: International stocks are undervalued!

Post by MotoTrojan »

Most of my international exposure is in FNDC :sharebeer. It wouldn't look quite so bad if you were a bit more fair though and included some small-value US funds as you did with FNDC.
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Noobvestor
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Re: International stocks are undervalued!

Post by Noobvestor »

I confess I've been wondering the same thing. All this focus on the US market (which overall isn't down that much), and little on small, value, international (developed and emerging) which have much more attractive valuations as far as I can tell. :shock:
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oneleaf
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Re: International stocks are undervalued!

Post by oneleaf »

I honestly feel like international is closer to a bottom than domestic. We've had some US down days, where international just didn't have as much to fall.

I remember in 2016 when emerging markets were getting close to single digit P/E's and the slide down only got so far before there was some support... and we are pretty much back there now. Things could get worse due to the unprecedented challenges, but I think there is more general bad news priced-in to international and emerging markets. The fact that many smart people are now saying we should move our equities back to the US makes me even more comfortable holding international.
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Re: International stocks are undervalued!

Post by dboeger1 »

I have a layman's understanding of economics, so take what I say with a grain of salt, but I feel like many international markets are trading at lower P/E ratios precisely because of key national differences, such as prevailing interest rates, QE policies, bank balance sheets, etc. Remember, P/E is only based on last quarter's earnings (or sometimes weighted averages over time), but investors pay for future earnings when they buy shares. So if you believe future earnings of international stocks are likely to underperform those of US stocks, then you wouldn't pay the same price ratio for those earnings.

That being said, national factors like those I mentioned are certainly subject to change over the course of decades, so I have no idea which markets will do better, which is why I own 100% VTWAX.
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raven15
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Re: International stocks are undervalued!

Post by raven15 »

OP, I am inclined to agree with you. Where do you get your current P/B data?

I agree that FNDA, DES, IJR, and maybe RZV would be fair comparisons.
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JohnDindex
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Re: International stocks are undervalued!

Post by JohnDindex »

International stocks have BEEN undervalued!

For many years. So far, value trap, maybe RTM in the future?
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jhsu802701
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Re: International stocks are undervalued!

Post by jhsu802701 »

MotoTrojan wrote: Fri Apr 03, 2020 5:15 pm Most of my international exposure is in FNDC :sharebeer. It wouldn't look quite so bad if you were a bit more fair though and included some small-value US funds as you did with FNDC.
None of the international funds I cited is an official value fund. I'd rather get a broad-based fund for better diversification by industry. (I used etf.com to search for the cheapest funds meeting the criteria I insisted on.) Official value funds tend to be biased towards certain industries (the ones that all too often "deserve" to be cheap). I do know that MOTI has the lowest price/book ratio among funds specializing in the moat approach, and DGRE has the lowest price/book ratio among dividend growth funds.
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Re: International stocks are undervalued!

Post by lostdog »

Get ready for the "Buy only American stocks" brigade...good luck.


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oneleaf
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Re: International stocks are undervalued!

Post by oneleaf »

JohnDindex wrote: Fri Apr 03, 2020 6:26 pm International stocks have BEEN undervalued!

For many years. So far, value trap, maybe RTM in the future?
It's true. It's best to view this as a 10-year bear market... a longterm opportunity to buy at reasonable valuations. I'm sticking to the strategy to the bitter end.
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JoMoney
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Re: International stocks are undervalued!

Post by JoMoney »

Maybe international stocks are cheap for a reason. Maybe they're irrationally priced cheaply and are a bargain. I don't know how to tell which is the case. A few thoughts aside from my usual defense that international just isn't necessary for a U.S. investor:
The "value" style has always rubbed me the wrong way. I've seen a "value investor" keep averaging in to a "cheap" stock as prices dropped until their portfolio was obliterated. I've never seen that happen to a trend follower. I've seen trend followers get whip-sawed, losing out on gains that a passive investor captured, but they don't buy things that aren't going up, and they don't try to grab falling knives :annoyed
A roulette player once rationalized to me, "... never play the cold numbers, the wheel probably isn't biased, but IF it is - you've got hard evidence of the numbers it's biased against..." :P
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Steve Reading
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Re: International stocks are undervalued!

Post by Steve Reading »

jhsu802701 wrote: Fri Apr 03, 2020 6:28 pm
MotoTrojan wrote: Fri Apr 03, 2020 5:15 pm Most of my international exposure is in FNDC :sharebeer. It wouldn't look quite so bad if you were a bit more fair though and included some small-value US funds as you did with FNDC.
None of the international funds I cited is an official value fund. I'd rather get a broad-based fund for better diversification by industry. (I used etf.com to search for the cheapest funds meeting the criteria I insisted on.) Official value funds tend to be biased towards certain industries (the ones that all too often "deserve" to be cheap). I do know that MOTI has the lowest price/book ratio among funds specializing in the moat approach, and DGRE has the lowest price/book ratio among dividend growth funds.
FNDC is a value fund. By its construction, it is virtually assured to be. Historically, RAFI indices have loaded similar amounts on the value factor as "official" value funds. And there's nothing in their methodology that would prevent a bias towards certain industries. In fact, if you look at FNDC, you'd see it shying away from Real Estate and Tech (unlike true blend funds like VSS and GWX).

The only reason it isn't an "official" value fund is RAFI's desire to make it appear different, innovative and somehow "better" than normal value funds. It's just marketing.

In fact, if you compare PB of FNDA vs VIOV (an "official" value fund), you'd notice they were basically the same (~1.08). They also have similar sector weightings. So even if you don't want to admit FNDC is a value fund and hence unfair to compare against VOO, then fine. Compare it against a "blend" fund like FNDA and, like Moto is telling you, it doesn't look quite so bad.
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jhsu802701
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Re: International stocks are undervalued!

Post by jhsu802701 »

raven15 wrote: Fri Apr 03, 2020 6:19 pm OP, I am inclined to agree with you. Where do you get your current P/B data?

I agree that FNDA, DES, IJR, and maybe RZV would be fair comparisons.
Yes, I have noticed that the price/book ratios vary depending on the source. I use Morningstar because it's proving to be the most up-to-date. And I use the price/book ratios there for comparing one fund to another. (It's analogous to the EPA fuel economy ratings.) That said, I use etf.com for the initial screening.

Morningstar's price/book ratios for the funds you cited are:
1. RZV (Invesco S&P SmallCap 600® Pure Value ETF): 0.47
2. DES (WisdomTree US SmallCap Dividend ETF): 0.98
3. FNDA (Schwab Fundamental US Small Company ETF): 1.09
4. IJR (iShares Core S&P Small-Cap ETF): 1.24

If you want some US stocks, small caps are a MUCH better bet than large caps. It helps that the small cap US stocks have been getting hit harder than large cap US stocks. For example, RZV is down 56% from its peak, DES is down 43% from its peak, FNDA is down 42% from its peak, and IJR is down 41% from its peak. VOO is down only 27% from its peak, VTI is down 29% from its peak, and QQQ is down only 23% from its peak.
gjlynch17
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Re: International stocks are undervalued!

Post by gjlynch17 »

oneleaf wrote: Fri Apr 03, 2020 6:41 pm
JohnDindex wrote: Fri Apr 03, 2020 6:26 pm International stocks have BEEN undervalued!

For many years. So far, value trap, maybe RTM in the future?
It's true. It's best to view this as a 10-year bear market... a longterm opportunity to buy at reasonable valuations. I'm sticking to the strategy to the bitter end.
+1. I am in my early 50s and I do not know if an opportunity like this will come around again during my accumulation phase again.
MotoTrojan
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Re: International stocks are undervalued!

Post by MotoTrojan »

Steve Reading wrote: Fri Apr 03, 2020 6:50 pm
jhsu802701 wrote: Fri Apr 03, 2020 6:28 pm
MotoTrojan wrote: Fri Apr 03, 2020 5:15 pm Most of my international exposure is in FNDC :sharebeer. It wouldn't look quite so bad if you were a bit more fair though and included some small-value US funds as you did with FNDC.
None of the international funds I cited is an official value fund. I'd rather get a broad-based fund for better diversification by industry. (I used etf.com to search for the cheapest funds meeting the criteria I insisted on.) Official value funds tend to be biased towards certain industries (the ones that all too often "deserve" to be cheap). I do know that MOTI has the lowest price/book ratio among funds specializing in the moat approach, and DGRE has the lowest price/book ratio among dividend growth funds.
FNDC is a value fund. By its construction, it is virtually assured to be. Historically, RAFI indices have loaded similar amounts on the value factor as "official" value funds. And there's nothing in their methodology that would prevent a bias towards certain industries. In fact, if you look at FNDC, you'd see it shying away from Real Estate and Tech (unlike true blend funds like VSS and GWX).

The only reason it isn't an "official" value fund is RAFI's desire to make it appear different, innovative and somehow "better" than normal value funds. It's just marketing.

In fact, if you compare PB of FNDA vs VIOV (an "official" value fund), you'd notice they were basically the same (~1.08). They also have similar sector weightings. So even if you don't want to admit FNDC is a value fund and hence unfair to compare against VOO, then fine. Compare it against a "blend" fund like FNDA and, like Moto is telling you, it doesn't look quite so bad.
Couldn’t have said it better. Thanks!
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Re: International stocks are undervalued!

Post by fennewaldaj »

oneleaf wrote: Fri Apr 03, 2020 6:00 pm I honestly feel like international is closer to a bottom than domestic. We've had some US down days, where international just didn't have as much to fall.

I remember in 2016 when emerging markets were getting close to single digit P/E's and the slide down only got so far before there was some support... and we are pretty much back there now. Things could get worse due to the unprecedented challenges, but I think there is more general bad news priced-in to international and emerging markets. The fact that many smart people are now saying we should move our equities back to the US makes me even more comfortable holding international.
And some of the emerging markets have had a better response the the virus than the US. Already China, Taiwan and S Korea could be said to have had a better response and that is a huge part of the index.
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Re: International stocks are undervalued!

Post by caklim00 »

I moved as much as I could to avdv today. .36 er without advisor fee. 10 years ago people would have been freaking out over it.
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Re: International stocks are undervalued!

Post by workingatit »

Which funds do you all specifically suggest in this group, for someone who wants diversification from VT?
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Re: International stocks are undervalued!

Post by watchnerd »

workingatit wrote: Fri Apr 03, 2020 10:29 pm Which funds do you all specifically suggest in this group, for someone who wants diversification from VT?
Diversification away from what?

VT is appropriately already heavily ex-US.
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SevenBridgesRoad
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Re: International stocks are undervalued!

Post by SevenBridgesRoad »

One Fund Portfolio: Vanguard Target Retirement Income Fund VTINX. I let Vanguard worry about my international allocation.
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Re: International stocks are undervalued!

Post by whodidntante »

I don't think p/b is a sensible valuation model, nor do I think any professional treats it as such, although it does prove to be sensible AS A COMPONENT OF the FF 5 factor model.

I wouldn't say global stocks are undervalued, but I am convinced that the valuation of the cheapest markets is attractive relative to the most expensive stock markets. But it has to be like that. The point that causes talking past each other is that the USA is currently in the list of expensive stock markets, and people want to assume it's because the USA stock market is inherently superior now and for their lifetime. Maybe they're right, but I personally don't have that conviction. If I did, I would join them.

Even with the most recent scalping, we are still far from blood in the streets valuations in the broad indexes. Current prices would seem further from low valuations if we discover that earnings have cratered as public companies report earnings over the next quarter. Equity prices could fall substantially from here. Maybe we'll get a 2020 Sheepdog thread.
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Re: International stocks are undervalued!

Post by whodidntante »

SevenBridgesRoad wrote: Fri Apr 03, 2020 11:35 pm One Fund Portfolio: Vanguard Target Retirement Income Fund VTINX. I let Vanguard worry about my international allocation.
This sounds rational to me.
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Re: International stocks are undervalued!

Post by workingatit »

watchnerd wrote: Fri Apr 03, 2020 11:08 pm
workingatit wrote: Fri Apr 03, 2020 10:29 pm Which funds do you all specifically suggest in this group, for someone who wants diversification from VT?
Diversification away from what?

VT is appropriately already heavily ex-US.

It seemed like the OP was listing small-cap funds, so I was asking which ones might best complement VT, which I thought was dominated by large caps.
workingatit
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Re: International stocks are undervalued!

Post by workingatit »

SevenBridgesRoad wrote: Fri Apr 03, 2020 11:35 pm One Fund Portfolio: Vanguard Target Retirement Income Fund VTINX. I let Vanguard worry about my international allocation.
I’ve been eyeing this for some time but now am not sure about the heavy bond load with low yields.
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Re: International stocks are undervalued!

Post by occambogle »

Just wondering... why not just VXUS for international exposure?

Also, what role is currency playing in all this both now and likely in the future.... there’s been some pretty big swings towards the dollar recently eg EUR and GBP.
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Re: International stocks are undervalued!

Post by invest4 »

oneleaf wrote: Fri Apr 03, 2020 6:41 pm
JohnDindex wrote: Fri Apr 03, 2020 6:26 pm International stocks have BEEN undervalued!

For many years. So far, value trap, maybe RTM in the future?
It's true. It's best to view this as a 10-year bear market... a longterm opportunity to buy at reasonable valuations. I'm sticking to the strategy to the bitter end.
I found International (and small caps) to be compelling for years and my portfolio held as much as 50% of AA (was 100% stocks) in funds such as:

DLS (Wisdom Tree Intl Small Cap)
DGS (Wisdom Tree Emerging Markets Small Cap)
EEMV (iShares Min Vol Emerging Markets)
EFAV (iShares Min Vol EAFE ETF)
GVAL (Cambria Global Value ETF)
FM (iShares Frontier 100) - the "fun" one with a relatively small amount.

Over the years, overall returns were disappointing. Eventually, I realized I was not so clever (at least the market didn't share my view) and also discovered the beauty of a simplified portfolio (VTI / VXUS and BND / BNDX..30% of each in Intl.). Intl results continue to be disappointing and during this downturn I have invested 100% of new monies in VTI during the drops with idea to let Intl trickle down to 20% and plan to maintain that new level. Of course, no one knows what the future holds, and agree it is as good a time as any if one wants to increase their investment in this area.

Best wishes for patience and rewarding returns.
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Re: International stocks are undervalued!

Post by sterjs »

whodidntante wrote: Sat Apr 04, 2020 12:27 amThe point that causes talking past each other is that the USA is currently in the list of expensive stock markets, and people want to assume it's because the USA stock market is inherently superior now and for their lifetime.
Assuming USA is the market with the least risk, USA should be the most expensive stock market. Dr. Aswath Damodaran (NYU) provides a lot of good information on equity risk premiums by country:

https://www.youtube.com/watch?v=S_bq0D5h5jU

Slides/Spreadsheets in description.
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Re: International stocks are undervalued!

Post by cjking »

I'm been advocating non-US stocks as better value on here for years. I don't think the amount better value they offer is any different now than it was previously though. As far as a I can tell, most index trackers around the world are down by similar amounts from pre-crisis levels. About 20% right now. (Price/[median last 3 months])
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Re: International stocks are undervalued!

Post by abuss368 »

Haven’t they been this way for 35 years? They appear to move in lock step with US anymore.
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Re: International stocks are undervalued!

Post by 3funder »

oneleaf wrote: Fri Apr 03, 2020 6:00 pm I honestly feel like international is closer to a bottom than domestic. We've had some US down days, where international just didn't have as much to fall.

I remember in 2016 when emerging markets were getting close to single digit P/E's and the slide down only got so far before there was some support... and we are pretty much back there now. Things could get worse due to the unprecedented challenges, but I think there is more general bad news priced-in to international and emerging markets. The fact that many smart people are now saying we should move our equities back to the US makes me even more comfortable holding international.
+1
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Re: International stocks are undervalued!

Post by bck63 »

lostdog wrote: Fri Apr 03, 2020 6:35 pm VTWAX and chill.
VFIAX and chill.
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Re: International stocks are undervalued!

Post by Always passive »

During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?), you can get 8-9% dividend (it has paid dividends 36 years consecutive) waiting for it to return to normal times. Chevron is also attractive. If you do not like oils, what about 3M, which has paid dividends 23 years consecutive and is yielding about 4% now. Look at all those stocks in the dividend aristrocat list (I think there are 60+), do some work and buy those that appeal to you the most. If you can wait 1-2 years, much better than bonds!
I am retired so I bought a little. But all those in the 30s, 40s, etc. It is a honeymoon!
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Re: International stocks are undervalued!

Post by Chip »

Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?), you can get 8-9% dividend (it has paid dividends 36 years consecutive) waiting for it to return to normal times.
I'll bet you a dollar that dividend gets cut.
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Re: International stocks are undervalued!

Post by watchnerd »

Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?)
Do I think Exxon will go under?

I don't think their future over the next several decades is bright, that's for sure.
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Re: International stocks are undervalued!

Post by jeffyscott »

oneleaf wrote: Fri Apr 03, 2020 6:41 pm
JohnDindex wrote: Fri Apr 03, 2020 6:26 pm International stocks have BEEN undervalued!

For many years. So far, value trap, maybe RTM in the future?
It's true. It's best to view this as a 10-year bear market... a longterm opportunity to buy at reasonable valuations. I'm sticking to the strategy to the bitter end.
Yes, it's been a lost decade, and more, in International. Based on total international, net return of about 0 over 13 years. In comparison US is only back to where it was a mere 2.5 years ago. I'm rebalancing (slowly) into international, but holding off for US (aside from whatever the balanced funds that we own are doing).

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Re: International stocks are undervalued!

Post by whodidntante »

Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?), you can get 8-9% dividend (it has paid dividends 36 years consecutive) waiting for it to return to normal times. Chevron is also attractive. If you do not like oils, what about 3M, which has paid dividends 23 years consecutive and is yielding about 4% now. Look at all those stocks in the dividend aristrocat list (I think there are 60+), do some work and buy those that appeal to you the most. If you can wait 1-2 years, much better than bonds!
I am retired so I bought a little. But all those in the 30s, 40s, etc. It is a honeymoon!
I have zero confidence in either Chevron or ExxonMobil's ability to beat the market long term. However, with oil being anomalously low due to demand destruction and excess production, you might get market beating returns temporarily on those companies if they can keep the wheels on until oil gets back to 40 or 50. It's risky and could be a total loss, but it's a good risk, I think.
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Re: International stocks are undervalued!

Post by raven15 »

jhsu802701 wrote: Fri Apr 03, 2020 6:52 pm
raven15 wrote: Fri Apr 03, 2020 6:19 pm OP, I am inclined to agree with you. Where do you get your current P/B data?

I agree that FNDA, DES, IJR, and maybe RZV would be fair comparisons.
Yes, I have noticed that the price/book ratios vary depending on the source. I use Morningstar because it's proving to be the most up-to-date. And I use the price/book ratios there for comparing one fund to another. (It's analogous to the EPA fuel economy ratings.) That said, I use etf.com for the initial screening.

Morningstar's price/book ratios for the funds you cited are:
1. RZV (Invesco S&P SmallCap 600® Pure Value ETF): 0.47
2. DES (WisdomTree US SmallCap Dividend ETF): 0.98
3. FNDA (Schwab Fundamental US Small Company ETF): 1.09
4. IJR (iShares Core S&P Small-Cap ETF): 1.24

If you want some US stocks, small caps are a MUCH better bet than large caps. It helps that the small cap US stocks have been getting hit harder than large cap US stocks. For example, RZV is down 56% from its peak, DES is down 43% from its peak, FNDA is down 42% from its peak, and IJR is down 41% from its peak. VOO is down only 27% from its peak, VTI is down 29% from its peak, and QQQ is down only 23% from its peak.
Thanks by the way. Is that a service you need to pay for? I did get a few from ycharts. Though at this point my investments are set it and forget it.
Last edited by raven15 on Sat Apr 04, 2020 11:45 am, edited 1 time in total.
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Spinola
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Re: International stocks are undervalued!

Post by Spinola »

jhsu802701 wrote: Fri Apr 03, 2020 3:10 pm
By comparison, US stock ETFs sell for MUCH higher multiples. Check out these price/book ratios from Morningstar:
1. VOO (Vanguard Total Stock Market ETF): 2.58
2. MOAT (VanEck Vectors Morningstar Wide Moat ETF): 2.63, nearly triple the multiple of MOTI (0.94)
3. VTI (Vanguard S&P 500 ETF): 2.7

OP, minor correction, you have VOO and VTI tickers reversed here.. VTI is Total market, VOO is SP500.. just sayin' :mrgreen:
and I agree with your post, which is why I am buying https://finance.yahoo.com/quote/BTMKX/p ... ce?p=BTMKX :sharebeer
drk
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Re: International stocks are undervalued!

Post by drk »

Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?), you can get 8-9% dividend (it has paid dividends 36 years consecutive) waiting for it to return to normal times. Chevron is also attractive. If you do not like oils, what about 3M, which has paid dividends 23 years consecutive and is yielding about 4% now. Look at all those stocks in the dividend aristrocat list (I think there are 60+), do some work and buy those that appeal to you the most. If you can wait 1-2 years, much better than bonds!
I am retired so I bought a little. But all those in the 30s, 40s, etc. It is a honeymoon!
As a young investor in a high tax bracket, dividends like that make me gag.
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birdog
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Re: International stocks are undervalued!

Post by birdog »

drk wrote: Sat Apr 04, 2020 11:45 am
Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?), you can get 8-9% dividend (it has paid dividends 36 years consecutive) waiting for it to return to normal times. Chevron is also attractive. If you do not like oils, what about 3M, which has paid dividends 23 years consecutive and is yielding about 4% now. Look at all those stocks in the dividend aristrocat list (I think there are 60+), do some work and buy those that appeal to you the most. If you can wait 1-2 years, much better than bonds!
I am retired so I bought a little. But all those in the 30s, 40s, etc. It is a honeymoon!
As a young investor in a high tax bracket, dividends like that make me gag.
In your case it would seem to only make sense in a tax-advantaged account. Otherwise, I agree, those dividends are a drawback for you.
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birdog
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Re: International stocks are undervalued!

Post by birdog »

watchnerd wrote: Sat Apr 04, 2020 9:29 am
Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?)
Do I think Exxon will go under?

I don't think their future over the next several decades is bright, that's for sure.
Same here. And for me, it's looking at trades like this that make me glad I became a passive investor. The data overwhelmingly shows that making trades like this over the long term will erode returns.
TonyDAntonio
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Re: International stocks are undervalued!

Post by TonyDAntonio »

JoMoney wrote: Fri Apr 03, 2020 6:47 pm Maybe international stocks are cheap for a reason. Maybe they're irrationally priced cheaply and are a bargain. I don't know how to tell which is the case. A few thoughts aside from my usual defense that international just isn't necessary for a U.S. investor:
The "value" style has always rubbed me the wrong way. I've seen a "value investor" keep averaging in to a "cheap" stock as prices dropped until their portfolio was obliterated. I've never seen that happen to a trend follower. I've seen trend followers get whip-sawed, losing out on gains that a passive investor captured, but they don't buy things that aren't going up, and they don't try to grab falling knives :annoyed
A roulette player once rationalized to me, "... never play the cold numbers, the wheel probably isn't biased, but IF it is - you've got hard evidence of the numbers it's biased against..." :P
My dad once scolded me at a craps table. My 21st birthday present was a trip to the casinos (actually, he was a very good man who just happened to like to gamble now and then). During a crap game I commented to him that it had been a long time since a seven was rolled, gambler heaven. You would have thought that I'd insulted his mother. I'm pretty sure I said it quietly enough so that the dice could not hear. :|
TonyDAntonio
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Re: International stocks are undervalued!

Post by TonyDAntonio »

birdog wrote: Sat Apr 04, 2020 12:50 pm
watchnerd wrote: Sat Apr 04, 2020 9:29 am
Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?)
Do I think Exxon will go under?

I don't think their future over the next several decades is bright, that's for sure.
Same here. And for me, it's looking at trades like this that make me glad I became a passive investor. The data overwhelmingly shows that making trades like this over the long term will erode returns.
I am overwhelmingly a passive index investor. But even I couldn't resist the XOM catnip with some fun/play/dumb money.
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jhsu802701
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Re: International stocks are undervalued!

Post by jhsu802701 »

raven15 wrote: Sat Apr 04, 2020 11:41 am
jhsu802701 wrote: Fri Apr 03, 2020 6:52 pm
raven15 wrote: Fri Apr 03, 2020 6:19 pm OP, I am inclined to agree with you. Where do you get your current P/B data?

I agree that FNDA, DES, IJR, and maybe RZV would be fair comparisons.
Yes, I have noticed that the price/book ratios vary depending on the source. I use Morningstar because it's proving to be the most up-to-date. And I use the price/book ratios there for comparing one fund to another. (It's analogous to the EPA fuel economy ratings.) That said, I use etf.com for the initial screening.

Morningstar's price/book ratios for the funds you cited are:
1. RZV (Invesco S&P SmallCap 600® Pure Value ETF): 0.47
2. DES (WisdomTree US SmallCap Dividend ETF): 0.98
3. FNDA (Schwab Fundamental US Small Company ETF): 1.09
4. IJR (iShares Core S&P Small-Cap ETF): 1.24

If you want some US stocks, small caps are a MUCH better bet than large caps. It helps that the small cap US stocks have been getting hit harder than large cap US stocks. For example, RZV is down 56% from its peak, DES is down 43% from its peak, FNDA is down 42% from its peak, and IJR is down 41% from its peak. VOO is down only 27% from its peak, VTI is down 29% from its peak, and QQQ is down only 23% from its peak.
Thanks by the way. Is that a service you need to pay for? I did get a few from ycharts. Though at this point my investments are set it and forget it.
All the sources I cited are available for free and don't even require signing up for anything.
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timboktoo
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Re: International stocks are undervalued!

Post by timboktoo »

International stocks have underperformed US stocks for a significant amount of time now. Mr. Bogle believed strongly in reversion to the mean. Vanguard's research points to an outperformance of international stocks over the next decade as well.

These three things, combined with metrics which make international look like they're in a value position to me, make me very excited about the prospects for international stocks over the next 10 years. I will continue to keep half of our equities in international stocks.

- Tim
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birdog
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Re: International stocks are undervalued!

Post by birdog »

TonyDAntonio wrote: Sat Apr 04, 2020 1:04 pm
birdog wrote: Sat Apr 04, 2020 12:50 pm
watchnerd wrote: Sat Apr 04, 2020 9:29 am
Always passive wrote: Sat Apr 04, 2020 8:33 am During times of stress one can get quality companies on the cheap. Why risk with anything else. If you buy Exxon today (anyone thinking that it will go under?)
Do I think Exxon will go under?

I don't think their future over the next several decades is bright, that's for sure.
Same here. And for me, it's looking at trades like this that make me glad I became a passive investor. The data overwhelmingly shows that making trades like this over the long term will erode returns.
I am overwhelmingly a passive index investor. But even I couldn't resist the XOM catnip with some fun/play/dumb money.
I hear ya. Nothing wrong with that. I sometimes wish I could do that with some play money as well but my IPS says that due to prior obsessions with trading I am not allowed to buy anything other than index funds lest I be tempted to let the active trading grow beyond just play money. I think my IPS is so mean but it says it's just strict because it loves me.
Godot
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Re: International stocks are undervalued!

Post by Godot »

whodidntante wrote: Sat Apr 04, 2020 12:27 am Maybe we'll get a 2020 Sheepdog thread.
Inevitable.
Estragon: I can't go on like this. | Vladimir: That's what you think. | ― Samuel Beckett, Waiting for Godot
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