Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

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Noobvestor
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Noobvestor »

WJW wrote: Mon Jun 15, 2020 5:55 am
Noobvestor wrote: Mon Jun 15, 2020 12:51 am
WJW wrote: Sun Jun 14, 2020 1:29 pm I hope Vanguard is wrong as I completely exited Int'l this year...
Buy high, sell low as they say. :shock:
Considering I bought the fund in June 2010, I think not. Had I invested say in the S&P 500 fund, I would have had double the money. And considering when I made the trade this year, I am happy with the move.
International is about where it was back in 2014, and lower than it was in early 2018. So you hung in for a decade of relatively flat returns, down from peak, and capitulated. Why? I assume poor performance? In 2010, I had a tough time bringing myself to invest in US stocks after a decade of even worse returns (straight up negative in the 2000s) than international had this past decade. Glad I didn't avoid US, though, on that basis.

I just don't understand selling things that are down relative to other things. Yes, technically, if you bought all of your international exactly in 2010, and didn't buy any more for a decade, you'd be up a bit, just down relative to US, but that still looks like 'selling low' in my book. I guess the question is: what are you selling it for? If (as I assume) you're selling to buy US, that's definitely buying high, selling low in relative terms.

And now you're judging the results of that shift based on a half-year of performance during a period that ... well, I won't go into politics. I'd ask why you did it, but I assume it was underperformance. So in 2010, you bought international presumably because it had done better than US and you wanted to diversify. Now you want to un-diversify and chase the last decade's winner. That's performance-chasing in a nutshell.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Cam894
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Cam894 »

Vanguard must really see something with the international markets. On the surface level it makes sense. But when you look at who could outperform the US with meaningful results for their investors it looks pretty bleak. Not to mention the ridiculous amounts of fraud committed overseas.

Every time I want to dump international I get talked out of it by the investophere.
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Noobvestor
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Noobvestor »

Cam894 wrote: Mon Jun 15, 2020 1:28 pm Vanguard must really see something with the international markets. On the surface level it makes sense. But when you look at who could outperform the US with meaningful results for their investors it looks pretty bleak. Not to mention the ridiculous amounts of fraud committed overseas. Every time I want to dump international I get talked out of it by the investophere.
Informal poll: how long have you and others who are itching to ditch international been invested? International beat US in the 2000s, lost in the 2010s. Emerging markets destroyed US in the 2000s, and are still ahead of the US for that 20-year period (albeit slightly)! Here's the link

So 'dangerous' EMs managed 150%+ returns in the 2000s, and 250% returns since 2000. Not seeing the problem here. Can people who are getting out of international now or inclined to explain why? Clearly things like 'rampant fraud' haven't impaired EM returns, so ... why?

(If anything, developed markets have been more of a letdown, but I assume when people talk fraud they're talking EMs.)
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
WJW
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by WJW »

Noobvestor wrote: Mon Jun 15, 2020 12:14 pm
WJW wrote: Mon Jun 15, 2020 5:55 am
Noobvestor wrote: Mon Jun 15, 2020 12:51 am
WJW wrote: Sun Jun 14, 2020 1:29 pm I hope Vanguard is wrong as I completely exited Int'l this year...
Buy high, sell low as they say. :shock:
Considering I bought the fund in June 2010, I think not. Had I invested say in the S&P 500 fund, I would have had double the money. And considering when I made the trade this year, I am happy with the move.
International is about where it was back in 2014, and lower than it was in early 2018. So you hung in for a decade of relatively flat returns, down from peak, and capitulated. Why? I assume poor performance? In 2010, I had a tough time bringing myself to invest in US stocks after a decade of even worse returns (straight up negative in the 2000s) than international had this past decade. Glad I didn't avoid US, though, on that basis.

I just don't understand selling things that are down relative to other things. Yes, technically, if you bought all of your international exactly in 2010, and didn't buy any more for a decade, you'd be up a bit, just down relative to US, but that still looks like 'selling low' in my book. I guess the question is: what are you selling it for? If (as I assume) you're selling to buy US, that's definitely buying high, selling low in relative terms.

And now you're judging the results of that shift based on a half-year of performance during a period that ... well, I won't go into politics. I'd ask why you did it, but I assume it was underperformance. So in 2010, you bought international presumably because it had done better than US and you wanted to diversify. Now you want to un-diversify and chase the last decade's winner. That's performance-chasing in a nutshell.
Call it what you will. I sold higher than I paid and used the money for other investments which are not international equities but not all US equities either. Irregardless, I made a decision and executed it. There are so many variables on what else I could have done with the money that it will be impossible to determine if my decision was the absolute best one I could have made at that moment in time.
3funder
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by 3funder »

Wow--lots of home country bias and inner rage on this forum. International stocks exist. Sometimes the returns are high; sometimes they are low. Any questions?
Global stocks, US bonds, and time.
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Noobvestor
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Noobvestor »

WJW wrote: Mon Jun 15, 2020 1:46 pmCall it what you will. I sold higher than I paid and used the money for other investments which are not international equities but not all US equities either. Irregardless, I made a decision and executed it. There are so many variables on what else I could have done with the money that it will be impossible to determine if my decision was the absolute best one I could have made at that moment in time.
I'm not sure why it would be hard to determine. Just wait a decade then backtest and compare your original and modified portfolios. I'm more interested in what drove you to sell (after buying in the first place) - i.e. what changed. Anyway, cheers and good luck :beer
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
asif408
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by asif408 »

3funder wrote: Mon Jun 15, 2020 1:49 pm Wow--lots of home country bias and inner rage on this forum. International stocks exist. Sometimes the returns are high; sometimes they are low. Any questions?
Bill Bernstein's bubble criteria:
(1) Everyone around you is talking about stocks (or real estate or whatever the fad asset of the day is). And you should really start worrying when the people talking about getting rich in certain areas of the market don’t have a background in finance.

(2) When people begin quitting their jobs to day trade or become a mortgage broker.

(3) When someone exhibits skepticism about the prospects for stocks and people don’t just disagree with them, but they do so vehemently and tell them they’re an idiot for not understanding things.

(4) When you start to see extreme predictions.
With the US/Int'l debate, I'm seeing a lot more of 1, 3, & 4 around here. When #2 kicks in we'll know the turning point for international stocks is here.
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1210sda
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by 1210sda »

Three points.....

1) Nobody knows nuttin' (definitely first and foremost)

2) Since I don't have anything better, I'll go along with them (for now) and hope they are low-ball.

3) I wonder what Dave Ramsey thinks of this..... :) :)
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Spinola
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Spinola »

Market predictions are to be taken with a grain of salt and are almost as useless as performance chasing and [insert nationality here] exceptionalism..
wesgreen
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by wesgreen »

galawdawg wrote: Sun Jun 14, 2020 5:41 pm
wesgreen wrote: Sun Jun 14, 2020 5:37 pm
galawdawg wrote: Sun Jun 14, 2020 2:03 pm
WJW wrote: Sun Jun 14, 2020 1:29 pm I hope Vanguard is wrong as I completely exited Int'l this year...
I never entered international. I have always subscribed to Jack Bogle's view that a US total stock index provides sufficient exposure to global markets while avoiding the risks unique to international stocks.

In 2010, I had a financial plan done by Vanguard. They recommended that I move 20% of my equity holdings from VTSAX to international (VTIAX). I disagreed and stayed the course. Good thing. If I had followed Vanguard's recommendation, it would have cost me over $250,000 in gains from 2010-present.
You don't understand - that's "just noise".
Yes, you are correct. Vanguard's recommendations were in fact, just noise! And Jack said, "ignore the noise." So I did. :D
What I meant is that some on this board, like Nisiprius, have for a long time maintained that that difference ($250.000 in your case, a little less in mine) is just noise. All depends on your perspective, I guess.
WJW
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by WJW »

Noobvestor wrote: Mon Jun 15, 2020 2:04 pm
WJW wrote: Mon Jun 15, 2020 1:46 pmCall it what you will. I sold higher than I paid and used the money for other investments which are not international equities but not all US equities either. Irregardless, I made a decision and executed it. There are so many variables on what else I could have done with the money that it will be impossible to determine if my decision was the absolute best one I could have made at that moment in time.
I'm not sure why it would be hard to determine. Just wait a decade then backtest and compare your original and modified portfolios. I'm more interested in what drove you to sell (after buying in the first place) - i.e. what changed. Anyway, cheers and good luck :beer
Ok, I will report back in a decade and let you know how I made out. The driving factor was another opportunity to deploy the proceeds from the sale to other assets that I think are a better investment (at least for me).
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by EddyB »

bloom2708 wrote: Thu Jun 11, 2020 4:35 pm I notice that many good products sell without advertising.

Is 40% international advertising to get it to sell? Kind of off topic, but these type of numbers would help "sell" international.

I'm still not buying.
The closest thing to universal agreement on this board is that low fees are good, yet even that concept has to be "sold."
afan
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by afan »

Apparently Vanguard started announcing these projections based on it capital markets model in 2010.

https://personal.vanguard.com/pdf/itvau ... 2210056903

Although it says one can find the full report at vanguard.com/outlook, that link no longer leads anywhere. I was able to find a google result pointing to the 2010 report but again it lead to a broken link.

The projects had a huge range and were not particularly accurate even given the room.
Vanguard has 10 years of history, so it knows how accurate its projections have been. As a cynic, I assume that they would tell us if the results were good. Since they don't tell us, I assume the predictions were as unreliable as one might expect.

As with other market projections, the best response is to ignore them.
Not quite "Nobody knows nothing". I am sure that the people who work on this for Vanguard know a great deal. They just don't know anything that has not already been priced in to the market. So their projections are useless.

More like "Nobody knows anything that would permit a useful projection of market returns"
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by galawdawg »

After several hours of searching, I was finally able to locate and download a copy of Vanguard’s Economic and Capital Markets Outlook from June 2010. I've hosted it here: https://pdfhost.io/v/X4MmLIfzu_Vanguard ... 010pdf.pdf
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Cam894
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Cam894 »

Noobvestor wrote: Mon Jun 15, 2020 1:44 pm
Cam894 wrote: Mon Jun 15, 2020 1:28 pm Vanguard must really see something with the international markets. On the surface level it makes sense. But when you look at who could outperform the US with meaningful results for their investors it looks pretty bleak. Not to mention the ridiculous amounts of fraud committed overseas. Every time I want to dump international I get talked out of it by the investophere.
Informal poll: how long have you and others who are itching to ditch international been invested? International beat US in the 2000s, lost in the 2010s. Emerging markets destroyed US in the 2000s, and are still ahead of the US for that 20-year period (albeit slightly)! Here's the link

So 'dangerous' EMs managed 150%+ returns in the 2000s, and 250% returns since 2000. Not seeing the problem here. Can people who are getting out of international now or inclined to explain why? Clearly things like 'rampant fraud' haven't impaired EM returns, so ... why?

(If anything, developed markets have been more of a letdown, but I assume when people talk fraud they're talking EMs.)
Fraud hasn't impacted returns YET. I would hate to be heavily exposed to China and India once a clearer picture of their business dealings becomes public.

Giant shell companies, non existent corporations, companies not producing what they say they are, manipulated markets.

With that said I am staying the course on international.
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Noobvestor
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Noobvestor »

Cam894 wrote: Mon Jun 15, 2020 9:34 pm
Noobvestor wrote: Mon Jun 15, 2020 1:44 pm
Cam894 wrote: Mon Jun 15, 2020 1:28 pm Vanguard must really see something with the international markets. On the surface level it makes sense. But when you look at who could outperform the US with meaningful results for their investors it looks pretty bleak. Not to mention the ridiculous amounts of fraud committed overseas. Every time I want to dump international I get talked out of it by the investophere.
Informal poll: how long have you and others who are itching to ditch international been invested? International beat US in the 2000s, lost in the 2010s. Emerging markets destroyed US in the 2000s, and are still ahead of the US for that 20-year period (albeit slightly)! Here's the link

So 'dangerous' EMs managed 150%+ returns in the 2000s, and 250% returns since 2000. Not seeing the problem here. Can people who are getting out of international now or inclined to explain why? Clearly things like 'rampant fraud' haven't impaired EM returns, so ... why?

(If anything, developed markets have been more of a letdown, but I assume when people talk fraud they're talking EMs.)
Fraud hasn't impacted returns YET. I would hate to be heavily exposed to China and India once a clearer picture of their business dealings becomes public.

Giant shell companies, non existent corporations, companies not producing what they say they are, manipulated markets.

With that said I am staying the course on international.
The US isn't fraud-proof - Enron comes to mind. Also some shady US practices helped crash the market in 08/09 as I recall. My point is that the EM countries that you listed did very well for their investors in the 2000s, and the US is just now catching back up to EM. So I guess some day it could all come crashing down, but for now at least it appears that the US wins sometimes, other countries other times, and I remain agnostic.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
CurlyDave
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by CurlyDave »

afan wrote: Mon Jun 15, 2020 5:26 pm
... As a cynic, I assume that they would tell us if the results were good. Since they don't tell us, I assume the predictions were as unreliable as one might expect...
+1

I bet they would be better off if they quit making the projections and devoted the salaries of the guys making them to reducing fees.
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by dru808 »

So, is small cap international the best of both worlds?
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by cheezit »

CurlyDave wrote: Tue Jun 16, 2020 12:20 am
afan wrote: Mon Jun 15, 2020 5:26 pm
... As a cynic, I assume that they would tell us if the results were good. Since they don't tell us, I assume the predictions were as unreliable as one might expect...
+1

I bet they would be better off if they quit making the projections and devoted the salaries of the guys making them to reducing fees.
I'll have to pitch this business plan to Vanguard right away. If they fire all the men and women involved in making market projections, they can replace the whole department with a dog and a short computer program. The dog will make the projections, and the computer program uses ML to correct for the dog's horrible tendency to begin every word with the letter 'R'. The whole thing can be done for the cost of a single-board computer, plus some bags of snacks for the canine!
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by BBBob »

:sharebeer To Cheezit!!!
Love it!!
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Cam894
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Re: Vanguard projects 10 year returns: TSM 6.5% Int'l 9.5%

Post by Cam894 »

Noobvestor wrote: Tue Jun 16, 2020 12:11 am
Cam894 wrote: Mon Jun 15, 2020 9:34 pm
Noobvestor wrote: Mon Jun 15, 2020 1:44 pm
Cam894 wrote: Mon Jun 15, 2020 1:28 pm Vanguard must really see something with the international markets. On the surface level it makes sense. But when you look at who could outperform the US with meaningful results for their investors it looks pretty bleak. Not to mention the ridiculous amounts of fraud committed overseas. Every time I want to dump international I get talked out of it by the investophere.
Informal poll: how long have you and others who are itching to ditch international been invested? International beat US in the 2000s, lost in the 2010s. Emerging markets destroyed US in the 2000s, and are still ahead of the US for that 20-year period (albeit slightly)! Here's the link

So 'dangerous' EMs managed 150%+ returns in the 2000s, and 250% returns since 2000. Not seeing the problem here. Can people who are getting out of international now or inclined to explain why? Clearly things like 'rampant fraud' haven't impaired EM returns, so ... why?

(If anything, developed markets have been more of a letdown, but I assume when people talk fraud they're talking EMs.)
Fraud hasn't impacted returns YET. I would hate to be heavily exposed to China and India once a clearer picture of their business dealings becomes public.

Giant shell companies, non existent corporations, companies not producing what they say they are, manipulated markets.

With that said I am staying the course on international.
The US isn't fraud-proof - Enron comes to mind. Also some shady US practices helped crash the market in 08/09 as I recall. My point is that the EM countries that you listed did very well for their investors in the 2000s, and the US is just now catching back up to EM. So I guess some day it could all come crashing down, but for now at least it appears that the US wins sometimes, other countries other times, and I remain agnostic.
Agreed. The thing that concerns me is what will be the Enron’s of China. Plural. With that said I won’t sell my international. Should be interesting.
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