S&P500 vs World Performance

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helloyou
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S&P500 vs World Performance

Post by helloyou » Sun May 17, 2020 6:03 am

The VT is clearly beaten by the SPY. I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?

Here is the performance head to head over the past 10 years.
Image

Feel free to check industry diversification here too https://www.etf.com/etfanalytics/etf-co ... /SPY-vs-VT

rkhusky
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Re: S&P500 vs World Performance

Post by rkhusky » Sun May 17, 2020 6:46 am

International has done poorly in recent years compared to the US. There is no guarantee that will continue. And, if you are going to check performance, 10 years is too short a time period. 40 years would be better - get you back to 1980, near the beginning of the personal computer and near the start of wide-spread stock investing (IRA started 1974/1981, 401k started 1978/1980, Roth IRA started 1997).

https://en.wikipedia.org/wiki/Individua ... nt_account
https://en.wikipedia.org/wiki/401(k)

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Forester
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Re: S&P500 vs World Performance

Post by Forester » Sun May 17, 2020 7:12 am

"It's risky to bet on one corner of the market. Always opt for a global index fund such as VT rather than VOO."

Triple digit golfer
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Re: S&P500 vs World Performance

Post by Triple digit golfer » Sun May 17, 2020 7:21 am

helloyou wrote:
Sun May 17, 2020 6:03 am
I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?
Yes it does, because diversification will remain but the outperformance may not.

SethJane42
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Re: S&P500 vs World Performance

Post by SethJane42 » Sun May 17, 2020 7:48 am

Deleted--I was wrong
Last edited by SethJane42 on Mon Jun 08, 2020 6:54 am, edited 1 time in total.

bgf
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Re: S&P500 vs World Performance

Post by bgf » Sun May 17, 2020 7:59 am

Just make it easy on yourself and buy the best performing asset ahead of time. You'll never be disappointed.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

whereskyle
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Re: S&P500 vs World Performance

Post by whereskyle » Sun May 17, 2020 8:12 am

helloyou wrote:
Sun May 17, 2020 6:03 am
The VT is clearly beaten by the SPY. I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?

Here is the performance head to head over the past 10 years.
Image

Feel free to check industry diversification here too https://www.etf.com/etfanalytics/etf-co ... /SPY-vs-VT
I like owning the u.s. market, and I like owning the global market (including the US), which makes me a U.S. overweighter. I buy VTI (Vanguard U.S. total stock market, ER .03) and VT regularly. No one can tell you if the US will continue to outperform. But nor can anyone tell you that the US stock market has not been one of the best performers in history. I personally put most of my eggs in the US basket, but I don’t put all of them there.
Last edited by whereskyle on Sun May 17, 2020 9:17 am, edited 1 time in total.
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SethJane42
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Re: S&P500 vs World Performance

Post by SethJane42 » Sun May 17, 2020 8:17 am

Deleted--I was wrong
Last edited by SethJane42 on Mon Jun 08, 2020 6:53 am, edited 1 time in total.

Jags4186
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Re: S&P500 vs World Performance

Post by Jags4186 » Sun May 17, 2020 8:20 am

Think of domestic and international returns as a seesaw. The total world index is the fulcrum. The US is on one side. International is on the other. Sometimes international returns will be higher/better. Sometimes domestic returns will be higher/better. Sometimes they will be similar. No matter the return of domestic or international, the total world index will never be above both either ends of the seesaw.

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Re: S&P500 vs World Performance

Post by Jags4186 » Sun May 17, 2020 8:22 am

SethJane42 wrote:
Sun May 17, 2020 8:17 am
Triple digit golfer wrote:
Sun May 17, 2020 7:21 am
helloyou wrote:
Sun May 17, 2020 6:03 am
I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?
Yes it does, because diversification will remain but the outperformance may not.
I only have so much time on earth left. I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner. Diversification is good to a point. One must never lose one's critical thinking skills over a dogmatic rule.
How do you decide when it's not the winner? How do you decide when to switch? If international outperforms US for a day will you switch? What about a week? What about a month? What about a year?

It's okay to be 100% domestic. But my concern is that you say you'll only stick with your domestic allocation until it no longer is the winner. That is performance chasing and is usually a performance killer.

SethJane42
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Re: S&P500 vs World Performance

Post by SethJane42 » Sun May 17, 2020 8:26 am

Deleted--I was wrong
Last edited by SethJane42 on Mon Jun 08, 2020 6:52 am, edited 1 time in total.

Anon9001
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Re: S&P500 vs World Performance

Post by Anon9001 » Sun May 17, 2020 8:31 am

Indexing always seems to be a weird proposition when you are doing outside of USA. I never bought the effecient markets theory so I only like indexes because of low costs. I would never invest in a World Index due to how in-effecient it would be over-weighting past winner countries USA and laggards who are big enough (Europe and Japan). It would under-weight the countries I am bullish on India,Indonesia and other EM countries. If you looked at MSCI ACWI at 1987 the index was 39% invested in Japan. A active manager would have out-performed ACWI completely just by excluding or under-weighitng Japan at the time.
Last edited by Anon9001 on Sun May 17, 2020 8:32 am, edited 1 time in total.

Triple digit golfer
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Re: S&P500 vs World Performance

Post by Triple digit golfer » Sun May 17, 2020 8:32 am

SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.

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Re: S&P500 vs World Performance

Post by Robot Monster » Sun May 17, 2020 8:34 am

Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
Yes. One might have to sell out at the worst possible time, after a U.S. market plummet.
"I HAVE THE POWER!!!" ~ He-Man

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midareff
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Re: S&P500 vs World Performance

Post by midareff » Sun May 17, 2020 8:36 am

SethJane42 wrote:
Sun May 17, 2020 7:48 am
VGTSX (Vanguard Total International Stock Index Fund Investor Shares) VS. SPY

Date Range from April 29th 1996 through 5/15/20 (25 years back)

VGTSX (10.26—14.23) +38.6% W/total dividends of $8.23 added in (not compounded): 118.91%

SPY (65.54—286.28) +336.8% W/total dividends of 66.56 (not compounded): 438.4%

I know VGTSX closed to new investors at some point, and am not sure if that affects the current price.

and therein is the problem with owning everything in the name of diversification and the "what if" concept.

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midareff
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Re: S&P500 vs World Performance

Post by midareff » Sun May 17, 2020 8:38 am

Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
and after 100 or more years of under-performance, and having to continually balance and rebalance into an under-performer the winner is... wait for it...... Warren Buffet.

SethJane42
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Re: S&P500 vs World Performance

Post by SethJane42 » Sun May 17, 2020 8:45 am

Deleted--I was wrong
Last edited by SethJane42 on Mon Jun 08, 2020 6:52 am, edited 2 times in total.

Robot Monster
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Re: S&P500 vs World Performance

Post by Robot Monster » Sun May 17, 2020 8:55 am

SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner. over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
I'm confused. You say, "best stay with the winner" but you really seem to be saying stay with the winner till it becomes the loser, then dump it? Seems like an undesirable time to be selling...?
Last edited by Robot Monster on Sun May 17, 2020 9:42 am, edited 1 time in total.
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Re: S&P500 vs World Performance

Post by Triple digit golfer » Sun May 17, 2020 8:58 am

I can't believe that so many Bogleheads are so vehemently against international equity investing. One of the key tenets of Bogleheads investing is diversification. Nowhere in the Bogleheads principles does it state not to invest internationally or to hold all eggs in the U.S. basket. International investing violates none of the Bogleheads principles. So if you don't do it, fine, but the nose in the air attitude about it after a decade of U.S. outperformance is nothing but recency bias. I bet not many people were so outspoken about U.S. only investing in 2007.

In fact, one of the principles is to stay the course. We've had many Bogleheads who have sold international and gone 100% U.S. That is clearly not staying the course.

Jack Bogle himself said that his recommendation is not to exceed 20%. He never said, "international investing is wrong." In fact, this is a direct quote from Bogle himself, speaking directly to Bogleheads in person:
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.
What do you think Bogle himself would feel is a bigger investing sin? Holding global market weight in equities for decades and staying the course throughout, or holding international for a decade of underperformance and then selling, changing one's course?

Here's another Bogle quote that should give you the answer:
Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you.

Triple digit golfer
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Re: S&P500 vs World Performance

Post by Triple digit golfer » Sun May 17, 2020 9:02 am

SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner. over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
Your logic is flawed. Investing isn't about being happy with past performance.

Anon9001
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Re: S&P500 vs World Performance

Post by Anon9001 » Sun May 17, 2020 9:05 am

Also if you are investing in something because it has good past performance you need to re-think your stragerty. Bitcoin had the highest returns these 10 years also. NASDAQ also made you gazillion returns. Why not invest 50-50 in these two products? That is a extreme example but one should not invest in a product because it has good past performance. One should have stronger ideas otherwise they will abadon the product when it returns less than they expected.

lostdog
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Re: S&P500 vs World Performance

Post by lostdog » Sun May 17, 2020 9:09 am

Triple digit golfer wrote:
Sun May 17, 2020 8:58 am
I can't believe that so many Bogleheads are so vehemently against international equity investing. One of the key tenets of Bogleheads investing is diversification. Nowhere in the Bogleheads principles does it state not to invest internationally or to hold all eggs in the U.S. basket. International investing violates none of the Bogleheads principles. So if you don't do it, fine, but the nose in the air attitude about it after a decade of U.S. outperformance is nothing but recency bias. I bet not many people were so outspoken about U.S. only investing in 2007.

In fact, one of the principles is to stay the course. We've had many Bogleheads who have sold international and gone 100% U.S. That is clearly not staying the course.

Jack Bogle himself said that his recommendation is not to exceed 20%. He never said, "international investing is wrong." In fact, this is a direct quote from Bogle himself, speaking directly to Bogleheads in person:
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.
What do you think Bogle himself would feel is a bigger investing sin? Holding global market weight in equities for decades and staying the course throughout, or holding international for a decade of underperformance and then selling, changing one's course?

Here's another Bogle quote that should give you the answer:
Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you.
This tends to be the older crowd. There are are other reasons that are not allowed to be discussed here. I'll just say overly patriotic with some extra agendas and you can follow the trail from there. This is a public forum so...

They don't want you to invest your money into foreign powers so they'll say whatever they can to stop you from doing it. Most likely in their mind, you're a traitor if you do.

Then you have the performance chasers. Might as well talk to a wall.

It's the same thing over and over and over. I've noticed some of the prominent members have given up arguing with these people.
Last edited by lostdog on Sun May 17, 2020 9:10 am, edited 1 time in total.
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SethJane42
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Re: S&P500 vs World Performance

Post by SethJane42 » Sun May 17, 2020 9:09 am

Deleted--I was wrong
Last edited by SethJane42 on Mon Jun 08, 2020 6:51 am, edited 1 time in total.

lostdog
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Re: S&P500 vs World Performance

Post by lostdog » Sun May 17, 2020 9:13 am

SethJane42 wrote:
Sun May 17, 2020 9:09 am
Triple digit golfer wrote:
Sun May 17, 2020 9:02 am
SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner. over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
Your logic is flawed. Investing isn't about being happy with past performance.
Well, my flawed logic over the last twenty years has paid very, very well. How's the ESITWF doing in comparison? Was I stupid to have not been in the ESITWF and in the S&P 500 Index instead? Take the "perfect logic" that you obviously believe that you possess, do some math, and report back with your work. How much over the next twenty years will the ESITWF have to outperform the S&P Index to come out ahead over 40 years total? 2000-2040?
We get it. You promote performance chasing on a forum that advocated a buy and hold strategy and diversification.
Global Market Cap Equity/1 Year Cash/Bonds || 25x Expenses

Triple digit golfer
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Re: S&P500 vs World Performance

Post by Triple digit golfer » Sun May 17, 2020 9:16 am

SethJane42 wrote:
Sun May 17, 2020 9:09 am
Triple digit golfer wrote:
Sun May 17, 2020 9:02 am
SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner. over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
Your logic is flawed. Investing isn't about being happy with past performance.
Well, my flawed logic over the last twenty years has paid very, very well. How's the ESITWF doing in comparison? Was I stupid to have not been in the ESITWF and in the S&P 500 Index instead? Take the "perfect logic" that you obviously believe that you possess, do some math, and report back with your work. How much over the next twenty years will the ESITWF have to outperform the S&P Index to come out ahead over 40 years total? 2000-2040?
Gee, I didn't see that coming. The old "how's that worked out for you?" routine.

You are performance chasing. Rationalize it any way you'd like.

As for your last question, that is irrelevant. It's like saying the last 10 dice rolls have landed on 6, so I'm going to keep betting all my money on 6 for future rolls.

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Re: S&P500 vs World Performance

Post by saintsfan342000 » Sun May 17, 2020 9:20 am

Hey look, another US vs International thread. We’re beating the stain on the ground left by the dead horse.
Already impartial now

Robot Monster
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Re: S&P500 vs World Performance

Post by Robot Monster » Sun May 17, 2020 9:23 am

saintsfan342000 wrote:
Sun May 17, 2020 9:20 am
Hey look, another US vs International thread. We’re beating the stain on the ground left by the dead horse.
Seems like we could all just create an FAQ over this subject and be done with it.
"I HAVE THE POWER!!!" ~ He-Man

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Re: S&P500 vs World Performance

Post by snailderby » Sun May 17, 2020 9:24 am

helloyou,

This is a frequently debated topic on these forums. I'm skeptical that much more can be said on this topic that hasn't already been said before. For a sampling, see viewtopic.php?t=196956 (755 posts); viewtopic.php?t=243785 (225 posts); viewtopic.php?t=255757 (538 posts); viewtopic.php?t=256423 (1248 posts); viewtopic.php?t=270186 (43 posts); viewtopic.php?t=278133 (205 posts); viewtopic.php?t=279564 (229 posts); viewtopic.php?t=280524 (105 posts); viewtopic.php?t=283603 (114 posts); viewtopic.php?t=283844 (83 posts); viewtopic.php?t=296055 (213 posts); viewtopic.php?t=297364 (65 posts); https://www.bogleheads.org/blog/2020/03 ... ld-part-1/; https://www.bogleheads.org/blog/2020/03 ... ld-part-2/; https://www.bogleheads.org/blog/2020/03 ... ld-part-3/; https://www.vanguard.com/pdf/icriecr.pdf; and https://www.vanguard.com/pdf/ISGGEB.pdf.

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Re: S&P500 vs World Performance

Post by dmcmahon » Sun May 17, 2020 9:43 am

whereskyle wrote:
Sun May 17, 2020 8:12 am
helloyou wrote:
Sun May 17, 2020 6:03 am
The VT is clearly beaten by the SPY. I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?

Here is the performance head to head over the past 10 years.
Image

Feel free to check industry diversification here too https://www.etf.com/etfanalytics/etf-co ... /SPY-vs-VT
I like owning the u.s. market, and I like owning the global market (including the US), which makes me a U.S. overweighter. I buy VTI (Vanguard U.S. total stock market, ER .03) and VT regularly. No one can tell you if the US will continue to outperform. But nor can anyone tell you that the US stock market has not been one of the best performers in history. I personally put most of my eggs in the US basket, but I don’t put all of them there.
Owning VT lets you shut your eyes to how poorly international is doing. VT looks OK on that chart only because it includes a big slug of US.

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Re: S&P500 vs World Performance

Post by bling » Sun May 17, 2020 9:48 am

SethJane42 wrote:
Sun May 17, 2020 9:09 am
Triple digit golfer wrote:
Sun May 17, 2020 9:02 am
SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner. over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
Your logic is flawed. Investing isn't about being happy with past performance.
Well, my flawed logic over the last twenty years has paid very, very well. How's the ESITWF doing in comparison? Was I stupid to have not been in the ESITWF and in the S&P 500 Index instead? Take the "perfect logic" that you obviously believe that you possess, do some math, and report back with your work. How much over the next twenty years will the ESITWF have to outperform the S&P Index to come out ahead over 40 years total? 2000-2040?
so you would tell your 20 year old self to put all your eggs in US moving forward? if US and ex-US switch places for the next 20 years, your new 40-year old self will be very disappointed.

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Re: S&P500 vs World Performance

Post by Triple digit golfer » Sun May 17, 2020 9:54 am

dmcmahon wrote:
Sun May 17, 2020 9:43 am
whereskyle wrote:
Sun May 17, 2020 8:12 am
helloyou wrote:
Sun May 17, 2020 6:03 am
The VT is clearly beaten by the SPY. I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?

Here is the performance head to head over the past 10 years.
Image

Feel free to check industry diversification here too https://www.etf.com/etfanalytics/etf-co ... /SPY-vs-VT
I like owning the u.s. market, and I like owning the global market (including the US), which makes me a U.S. overweighter. I buy VTI (Vanguard U.S. total stock market, ER .03) and VT regularly. No one can tell you if the US will continue to outperform. But nor can anyone tell you that the US stock market has not been one of the best performers in history. I personally put most of my eggs in the US basket, but I don’t put all of them there.
Owning VT lets you shut your eyes to how poorly international is doing has done. VT looks OK on that chart only because it includes a big slug of US.
Key words: is doing

You only know how investments have done, not how they will do moving forward.

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Re: S&P500 vs World Performance

Post by tibbitts » Sun May 17, 2020 10:02 am

SethJane42 wrote:
Sun May 17, 2020 8:17 am
Triple digit golfer wrote:
Sun May 17, 2020 7:21 am
helloyou wrote:
Sun May 17, 2020 6:03 am
I was wondering if the obvious geographic diversification benefit of the VT outweighs its lower performance over the SPY?
Yes it does, because diversification will remain but the outperformance may not.
I only have so much time on earth left. I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner. Diversification is good to a point. One must never lose one's critical thinking skills over a dogmatic rule.
So, after a month of International outperformance, you'll go 100% international? A year? Two years?

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Re: S&P500 vs World Performance

Post by pokebowl » Sun May 17, 2020 7:52 pm

midareff wrote:
Sun May 17, 2020 8:36 am
SethJane42 wrote:
Sun May 17, 2020 7:48 am
VGTSX (Vanguard Total International Stock Index Fund Investor Shares) VS. SPY

Date Range from April 29th 1996 through 5/15/20 (25 years back)

VGTSX (10.26—14.23) +38.6% W/total dividends of $8.23 added in (not compounded): 118.91%

SPY (65.54—286.28) +336.8% W/total dividends of 66.56 (not compounded): 438.4%

I know VGTSX closed to new investors at some point, and am not sure if that affects the current price.

and therein is the problem with owning everything in the name of diversification and the "what if" concept.
May I ask if you were to repeat this end point experiment from 1965 through 1990 (also 25 years), what the results will be? :beer

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Ramjet
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Re: S&P500 vs World Performance

Post by Ramjet » Sun May 17, 2020 8:02 pm

Triple digit golfer wrote:
Sun May 17, 2020 8:58 am
I can't believe that so many Bogleheads are so vehemently against international equity investing
The very person who the forum was named after didn't recommend international but somehow cannot believe why some Bogleheads wouldn't want to invest in it :confused

oldfort
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Re: S&P500 vs World Performance

Post by oldfort » Sun May 17, 2020 8:07 pm

rkhusky wrote:
Sun May 17, 2020 6:46 am
International has done poorly in recent years compared to the US. There is no guarantee that will continue. And, if you are going to check performance, 10 years is too short a time period. 40 years would be better - get you back to 1980, near the beginning of the personal computer and near the start of wide-spread stock investing (IRA started 1974/1981, 401k started 1978/1980, Roth IRA started 1997).

https://en.wikipedia.org/wiki/Individua ... nt_account
https://en.wikipedia.org/wiki/401(k)
If you want to go further back in time, the last Dimson-Marsh report shows from 1900-2019, the US returned 6.5% real and Europe returned 4.3% real.

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UpsetRaptor
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Re: S&P500 vs World Performance

Post by UpsetRaptor » Sun May 17, 2020 9:27 pm

oldfort wrote:
Sun May 17, 2020 8:07 pm
rkhusky wrote:
Sun May 17, 2020 6:46 am
International has done poorly in recent years compared to the US. There is no guarantee that will continue. And, if you are going to check performance, 10 years is too short a time period. 40 years would be better - get you back to 1980, near the beginning of the personal computer and near the start of wide-spread stock investing (IRA started 1974/1981, 401k started 1978/1980, Roth IRA started 1997).

https://en.wikipedia.org/wiki/Individua ... nt_account
https://en.wikipedia.org/wiki/401(k)
If you want to go further back in time, the last Dimson-Marsh report shows from 1900-2019, the US returned 6.5% real and Europe returned 4.3% real.
Yup. And 200 years ago the US was not even a top 10 economy. It's actually outperformed for centuries. Sure, periods of international outperformance here and there, but the long term trend is clear. I really wonder how many years of extended US outperformance it would take for those who promote global cap as a truly risk free diversification free lunch to take a step back and say "Hmmm, I wonder if there's something not completely 100% accurate about this theory".

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Noobvestor
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Re: S&P500 vs World Performance

Post by Noobvestor » Mon May 18, 2020 2:17 am

It's like deja vu in reverse - 10 years ago everyone thought the US equity market was dead after a decade of dismal negative returns. Winners rotate. I'm not betting either way (50/50 US international for me!) but if I had to guess, I'd guess they'll rotate again at some point ...
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Noobvestor
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Re: S&P500 vs World Performance

Post by Noobvestor » Mon May 18, 2020 2:18 am

Ramjet wrote:
Sun May 17, 2020 8:02 pm
Triple digit golfer wrote:
Sun May 17, 2020 8:58 am
I can't believe that so many Bogleheads are so vehemently against international equity investing
The very person who the forum was named after didn't recommend international but somehow cannot believe why some Bogleheads wouldn't want to invest in it :confused
""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." - Jack Bogle

viewtopic.php?t=104781

International is now cheap and easy to index at Vanguard - cheaper than at any point in Jack's lifetime. He also lived through a period of American exceptionalism and probably took some pride in his first index fund (a US fund). I think he was right about a lot ... including that quote. Anyway, I took his advice, thought it through, read the research, and concluded country concentration risk is something I'd like to diversify away from.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Vulcan
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Re: S&P500 vs World Performance

Post by Vulcan » Mon May 18, 2020 4:10 am

Don't confuse strategy with outcome.

The correct strategy is knowable in advance. The outcome is not.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

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Re: S&P500 vs World Performance

Post by minimalistmarc » Mon May 18, 2020 6:04 am

Isn’t American outperformance mostly down to FAANG?

Who knows where the next FAANG will originate?

I mean, in the next few decades we’ll probably have self driving flying cars, cures for lots of incurable diseases, amazing new green technology. I’d rather cast my net wide.

It’s an easier decision for me because I’m in the U.K. and don’t want to have any home bias

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Re: S&P500 vs World Performance

Post by midareff » Mon May 18, 2020 6:08 am

pokebowl wrote:
Sun May 17, 2020 7:52 pm
midareff wrote:
Sun May 17, 2020 8:36 am
SethJane42 wrote:
Sun May 17, 2020 7:48 am
VGTSX (Vanguard Total International Stock Index Fund Investor Shares) VS. SPY

Date Range from April 29th 1996 through 5/15/20 (25 years back)

VGTSX (10.26—14.23) +38.6% W/total dividends of $8.23 added in (not compounded): 118.91%

SPY (65.54—286.28) +336.8% W/total dividends of 66.56 (not compounded): 438.4%

I know VGTSX closed to new investors at some point, and am not sure if that affects the current price.

and therein is the problem with owning everything in the name of diversification and the "what if" concept.
May I ask if you were to repeat this end point experiment from 1965 through 1990 (also 25 years), what the results will be? :beer
I can't back test a fund that started on April 29, 1996, to 1965. OTOH, in another thread it was graphically shown that the S&P 500 outperformed international by roughly 2.5% per year from 1900 through now.

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Re: S&P500 vs World Performance

Post by climber2020 » Mon May 18, 2020 6:15 am

SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
By this logic you should invest all your current money in Apple since it has far outclassed the S&P 500 over the last 20 years, or even better, Monster Beverage Corp.

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Re: S&P500 vs World Performance

Post by Triple digit golfer » Mon May 18, 2020 6:26 am

Ramjet wrote:
Sun May 17, 2020 8:02 pm
Triple digit golfer wrote:
Sun May 17, 2020 8:58 am
I can't believe that so many Bogleheads are so vehemently against international equity investing
The very person who the forum was named after didn't recommend international but somehow cannot believe why some Bogleheads wouldn't want to invest in it :confused
That's not at all what I said. You completely missed the point, perhaps by choice.

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Re: S&P500 vs World Performance

Post by midareff » Mon May 18, 2020 8:25 am

UpsetRaptor wrote:
Sun May 17, 2020 9:27 pm
oldfort wrote:
Sun May 17, 2020 8:07 pm
rkhusky wrote:
Sun May 17, 2020 6:46 am
International has done poorly in recent years compared to the US. There is no guarantee that will continue. And, if you are going to check performance, 10 years is too short a time period. 40 years would be better - get you back to 1980, near the beginning of the personal computer and near the start of wide-spread stock investing (IRA started 1974/1981, 401k started 1978/1980, Roth IRA started 1997).

https://en.wikipedia.org/wiki/Individua ... nt_account
https://en.wikipedia.org/wiki/401(k)
If you want to go further back in time, the last Dimson-Marsh report shows from 1900-2019, the US returned 6.5% real and Europe returned 4.3% real.
Yup. And 200 years ago the US was not even a top 10 economy. It's actually outperformed for centuries. Sure, periods of international outperformance here and there, but the long term trend is clear. I really wonder how many years of extended US outperformance it would take for those who promote global cap as a truly risk free diversification free lunch to take a step back and say "Hmmm, I wonder if there's something not completely 100% accurate about this theory".
Exactly, and if I may add.... Since nearly half of the sales of the S&P 500 companies are x-US, with the overall rate for 2018 was 42.90%, down from 2017's 43.62% and 2016's 43.16%. The recent high mark was 2014's 47.82%, and the recent low mark was 2003's 41.84%, the S&P 500 is already significantly tied to the economies and prosperity of the world. To think that you don't have significant exposure to the rest of the world without owning companies that choose to be domiciled elsewhere would seem to be unfounded.

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Re: S&P500 vs World Performance

Post by Rick Ferri » Mon May 18, 2020 8:37 am

If you want to know why international has underperformed in the past decade, just do a comparison of funds on the Vanguard website using VTSAX and VTIAX. The reason will be clear when you get to industries. International stock indices have heavier weighting to materials, energy, consumer defensive, and lower weighting in technology, healthcare.

In addition, the US dollar has been strong.

Bottom line: international stocks are a value stock allocation in addition to a foreign currency diversification play.

Rick
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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pennsylvania211
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Re: S&P500 vs World Performance

Post by pennsylvania211 » Mon May 18, 2020 10:19 am

Jack Bogle himself why he doesn't like international (he advises that if you MUST, no more than 20%):
At the end of the day, some bogleheads follow bogle when deciding not to do international. Other bogleheads follow his diversification principle when deciding to do international.

For anyone to claim superiority of one method over another, you have do demonstrate it with well reasoned argument and/or good evidence. I'd like to see an actual debate of merits but these things often turn into half-baked ego-filled spats which is a waste of everyone else's time.

If anyone has Jack explaining in detail why he breaks his own rule of diversification when going against international, that would be gold.
"In the long run, investing is not about markets at all. Investing is about enjoying the returns earned by businesses." - Jack Bogle

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Re: S&P500 vs World Performance

Post by jibantik » Mon May 18, 2020 8:24 pm

pennsylvania211 wrote:
Mon May 18, 2020 10:19 am
Jack Bogle himself why he doesn't like international (he advises that if you MUST, no more than 20%):
At the end of the day, some bogleheads follow bogle when deciding not to do international. Other bogleheads follow his diversification principle when deciding to do international.

For anyone to claim superiority of one method over another, you have do demonstrate it with well reasoned argument and/or good evidence. I'd like to see an actual debate of merits but these things often turn into half-baked ego-filled spats which is a waste of everyone else's time.

If anyone has Jack explaining in detail why he breaks his own rule of diversification when going against international, that would be gold.
One is following principles, one is following the actions of a man who fell short of the wonderful principles he popularized.

It's clear to see which one is correct

I mean, if you go to church, do you strive to mimic the pastor's personal life or to follow the core principles that are espoused?

SteadyOne
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Re: S&P500 vs World Performance

Post by SteadyOne » Mon May 18, 2020 9:11 pm

Triple digit golfer wrote:
Sun May 17, 2020 9:02 am
SethJane42 wrote:
Sun May 17, 2020 8:45 am
Triple digit golfer wrote:
Sun May 17, 2020 8:32 am
SethJane42 wrote:
Sun May 17, 2020 8:17 am
I'll stick with the overwhelming winner, the S&P 500 Index fund, until it's not the winner.
Good luck with that. Investing in something until it is not the winner literally means you'll sell after it underperforms.
The point is I've been in the S&P 500 for 20 years and it has been the clear winner. over the Every Stock In The World Fund (ESITWF). If the next 20 years the ESITWF outperforms the S&P 500 Index Fund by the same the S&P has beat the ESITWF, then it averages out anyway. So, best to stay with the winner.

But if you love the ESITWF and you're happy with the level of gains it has given you the past 20 years, then by all means keep with it.
Your logic is flawed. Investing isn't about being happy with past performance.
Really? So having portfolio grow to 1 million shouldn’t make one happy?
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court

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Re: S&P500 vs World Performance

Post by arcticpineapplecorp. » Mon May 18, 2020 9:31 pm

"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

SteadyOne
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Re: S&P500 vs World Performance

Post by SteadyOne » Mon May 18, 2020 9:36 pm

rkhusky wrote:
Sun May 17, 2020 6:46 am
International has done poorly in recent years compared to the US. There is no guarantee that will continue. And, if you are going to check performance, 10 years is too short a time period. 40 years would be better - get you back to 1980, near the beginning of the personal computer and near the start of wide-spread stock investing (IRA started 1974/1981, 401k started 1978/1980, Roth IRA started 1997).

https://en.wikipedia.org/wiki/Individua ... nt_account
https://en.wikipedia.org/wiki/401(k)
Going even farther in time to 1900. For the US average return is 6.5% REAL return (9.6% nominal). However, the ex-US is only 4.5% real. See page 11:

https://www.credit-suisse.com/media/ass ... y-2018.pdf.

So, one can legitimately say that US stock market ALWAYS outperforms non-US on average, since it’s as far as we can reasonably go in time.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court

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