Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

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PackersFan12
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Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by PackersFan12 »

https://www.youtube.com/watch?v=P54trh0 ... star%2CInc

What is your reaction to this video?
stan1
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by stan1 »

I'd recommend reading this page (including the links)
https://investor.vanguard.com/investing ... -investing

Do you think Jack is right or do you think Vanguard is right? Why?
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tc101
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by tc101 »

I don't think this has been discussed here before, so I am very interested in what people have to say about it.
. | The most important thing you should know about me is that I am not an expert.
JBTX
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by JBTX »

tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Indeed! I'm sure the definitive and concensus answer will be sorted out quickly.
Johnathon Livingston
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Johnathon Livingston »

My reaction is that there is no other expert on investing that I respect more than Jack Bogle, and I wish he was still with us.
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JoMoney
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by JoMoney »

tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Yes, must have been two or three minutes since the last thread about whether or not international is necessary.

I'm with Jack, I think U.S. investors can (and have) do just fine ignoring international. There are additional costs, tax considerations, and risks.
That said, it's been awhile since global ex-US has outperformed, sooner or later it will. Figure out a portfolio and strategy you can stick with.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
roth evangelist
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by roth evangelist »

There's a problem with relying on something like this the older it gets. The superiority of index funds probably won't ever change, but the superiority of U.S. stocks very much can.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by hi_there »

I think there is a strong, or at least reasonable argument to favor US stocks over international on the basis of international markets' lower value of investable market capitalization relative to GDP and population. If fewer shares are available to public investors who want to share in the economic gains of specific countries, then this could result in those shares being overvalued relative to their risk.

Regarding the video, history supports Jack Bogle's view in the post 2008 era, which is the world we live in now. The financial system of almost every developed country has been completely reformed, and lots of the tail risk potential in the US has gone away. I'm not sure if the same can be said for other countries, and stock performance can add some information on whether governance has worked well.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Trader Joe »

"Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks"

Because he knew that the U.S. Stock Market was and is the gold standard.

And, he was 100% correct.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by retiredflyboy »

Certainly many US companies have international exposure.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by rick51 »

The 20% compromise works for me.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Brianmcg321 »

tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
LOL.

Thats a good one. :beer
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by ApeAttack »

tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Hmmm... There are like hundreds of threads clearing demonstrating 100% ex-US always outperforms the rest. This is why we call VTSAX "Bogle's Folly."
Just another lazy index investor who recently found out about I-Bonds (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm).
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by tibbitts »

retiredflyboy wrote: Wed Jul 21, 2021 9:18 pm Certainly many US companies have international exposure.
And many ex-US companies have US exposure.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by gubernaculum »

Because there is no comparison to American ingenuity. USA stocks is all you need.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by bikechuck »

hi_there wrote: Wed Jul 21, 2021 9:13 pm I think there is a strong, or at least reasonable argument to favor US stocks over international on the basis of international markets' lower value of investable market capitalization relative to GDP and population. If fewer shares are available to public investors who want to share in the economic gains of specific countries, then this could result in those shares being overvalued relative to their risk.

Regarding the video, history supports Jack Bogle's view in the post 2008 era, which is the world we live in now. The financial system of almost every developed country has been completely reformed, and lots of the tail risk potential in the US has gone away. I'm not sure if the same can be said for other countries, and stock performance can add some information on whether governance has worked well.
With the U.S. skyrocketing national debt the value of the dollar could fall. Should that happen it will favor international equities held by U.S. investors.

International has represented 20% of my equity holdings for many years now and I intend to stay the course. I do think that you should choose a strategy and stay with it. If you begin bouncing around with your allocation you are likely to outsmart yourself.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Da5id »

PackersFan12 wrote: Wed Jul 21, 2021 8:33 pm https://www.youtube.com/watch?v=P54trh0 ... star%2CInc

What is your reaction to this video?
As you once quite wisely put it viewtopic.php?p=4886409#p4886409
venkman
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by venkman »

"Nobody knows nothin'. Except that you don't need international stocks. I know that..."
Nathan Drake
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Nathan Drake »

My reaction is that yes, Bogle is largely correct. International is undervalued because the market is pricing in more risk. The market sees the US as having generally good government, good entrepreneurship, good institutions and protections as Bogle has stated. This is all priced in from the lens of a backwards looking viewpoint. But sentiment can change. Maybe in the future US institutions are not as strong as they once were. Maybe our debt/GDP ratio (currently amongst the highest levels of the developed world) causes issues for the dollar and clamps GDP growth. Sentiment can change, and the market will then adjust to the "riskier" US by reducing valuations from their current levels should that occur.

Therefore investors should expect higher returns from exUS going forward because of the higher discount rate.

It's interesting that he's a lot less definitive in those recent statements than he has been in the past. He even suggests in the video that a global cap weighted portfolio may be the reasonable choice to make. Bogle lived through a period of enormous US exceptionalism, but we are not investing for yesterday and past returns aren't indicative of future performance.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by hi_there »

bikechuck wrote: Wed Jul 21, 2021 9:44 pm
hi_there wrote: Wed Jul 21, 2021 9:13 pm I think there is a strong, or at least reasonable argument to favor US stocks over international on the basis of international markets' lower value of investable market capitalization relative to GDP and population. If fewer shares are available to public investors who want to share in the economic gains of specific countries, then this could result in those shares being overvalued relative to their risk.

Regarding the video, history supports Jack Bogle's view in the post 2008 era, which is the world we live in now. The financial system of almost every developed country has been completely reformed, and lots of the tail risk potential in the US has gone away. I'm not sure if the same can be said for other countries, and stock performance can add some information on whether governance has worked well.
With the U.S. skyrocketing national debt the value of the dollar could fall. Should that happen it will favor international equities held by U.S. investors.

International has represented 20% of my equity holdings for many years now and I intend to stay the course. I do think that you should choose a strategy and stay with it. If you begin bouncing around with your allocation you are likely to outsmart yourself.
Good points! Not sure if I agree with the underlined statement though. Weaker dollar = stronger international earnings, which will lead to higher nominal US stock prices. Observe, for example, the negative correlation between JPY and Nikkei 225 index in its domestic currency, or the explosive performance of US stocks from 2020 until today.

I agree that long term strategic allocation is important. However, for the purposes of constructing a portfolio today, Jack Bogle's argument excludes international stocks. The inception allocation has to come from somewhere.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Nathan Drake »

hi_there wrote: Wed Jul 21, 2021 10:19 pm
bikechuck wrote: Wed Jul 21, 2021 9:44 pm
hi_there wrote: Wed Jul 21, 2021 9:13 pm I think there is a strong, or at least reasonable argument to favor US stocks over international on the basis of international markets' lower value of investable market capitalization relative to GDP and population. If fewer shares are available to public investors who want to share in the economic gains of specific countries, then this could result in those shares being overvalued relative to their risk.

Regarding the video, history supports Jack Bogle's view in the post 2008 era, which is the world we live in now. The financial system of almost every developed country has been completely reformed, and lots of the tail risk potential in the US has gone away. I'm not sure if the same can be said for other countries, and stock performance can add some information on whether governance has worked well.
With the U.S. skyrocketing national debt the value of the dollar could fall. Should that happen it will favor international equities held by U.S. investors.

International has represented 20% of my equity holdings for many years now and I intend to stay the course. I do think that you should choose a strategy and stay with it. If you begin bouncing around with your allocation you are likely to outsmart yourself.
Good points! Not sure if I agree with the underlined statement though. Weaker dollar = stronger international earnings, which will lead to higher nominal US stock prices. Observe, for example, the negative correlation between JPY and Nikkei 225 index in its domestic currency, or the explosive performance of US stocks from 2020 until today.

I agree that long term strategic allocation is important. However, for the purposes of constructing a portfolio today, Jack Bogle's argument excludes international stocks. The inception allocation has to come from somewhere.
The relative influence of foreign earnings is much stronger obviously for foreign companies. So, all else being equal, that will favor foreign stocks over US ones should the dollar fall.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by hi_there »

Nathan Drake wrote: Wed Jul 21, 2021 10:24 pm
hi_there wrote: Wed Jul 21, 2021 10:19 pm
bikechuck wrote: Wed Jul 21, 2021 9:44 pm
hi_there wrote: Wed Jul 21, 2021 9:13 pm I think there is a strong, or at least reasonable argument to favor US stocks over international on the basis of international markets' lower value of investable market capitalization relative to GDP and population. If fewer shares are available to public investors who want to share in the economic gains of specific countries, then this could result in those shares being overvalued relative to their risk.

Regarding the video, history supports Jack Bogle's view in the post 2008 era, which is the world we live in now. The financial system of almost every developed country has been completely reformed, and lots of the tail risk potential in the US has gone away. I'm not sure if the same can be said for other countries, and stock performance can add some information on whether governance has worked well.
With the U.S. skyrocketing national debt the value of the dollar could fall. Should that happen it will favor international equities held by U.S. investors.

International has represented 20% of my equity holdings for many years now and I intend to stay the course. I do think that you should choose a strategy and stay with it. If you begin bouncing around with your allocation you are likely to outsmart yourself.
Good points! Not sure if I agree with the underlined statement though. Weaker dollar = stronger international earnings, which will lead to higher nominal US stock prices. Observe, for example, the negative correlation between JPY and Nikkei 225 index in its domestic currency, or the explosive performance of US stocks from 2020 until today.

I agree that long term strategic allocation is important. However, for the purposes of constructing a portfolio today, Jack Bogle's argument excludes international stocks. The inception allocation has to come from somewhere.
The relative influence of foreign earnings is much stronger obviously for foreign companies. So, all else being equal, that will favor foreign stocks over US ones should the dollar fall.
Won't USD nominal prices increase also? Falling dollar => more inflation => higher prices of everything, including asset prices. Take rising real estate prices across the US as a directly observable example at the moment. The same is happening for stocks, although the effect is harder to trace.

Now, obviously this relationship will not hold if the same factors that cause USD devaluation also impact economic growth. However, that doesn't seem to be the case so far, particularly when policy is driving a structural decline in interest rates, since the level of national debt does not matter as much as the country's ability to service debt payments.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Nathan Drake »

hi_there wrote: Wed Jul 21, 2021 10:38 pm
Nathan Drake wrote: Wed Jul 21, 2021 10:24 pm
hi_there wrote: Wed Jul 21, 2021 10:19 pm
bikechuck wrote: Wed Jul 21, 2021 9:44 pm
hi_there wrote: Wed Jul 21, 2021 9:13 pm I think there is a strong, or at least reasonable argument to favor US stocks over international on the basis of international markets' lower value of investable market capitalization relative to GDP and population. If fewer shares are available to public investors who want to share in the economic gains of specific countries, then this could result in those shares being overvalued relative to their risk.

Regarding the video, history supports Jack Bogle's view in the post 2008 era, which is the world we live in now. The financial system of almost every developed country has been completely reformed, and lots of the tail risk potential in the US has gone away. I'm not sure if the same can be said for other countries, and stock performance can add some information on whether governance has worked well.
With the U.S. skyrocketing national debt the value of the dollar could fall. Should that happen it will favor international equities held by U.S. investors.

International has represented 20% of my equity holdings for many years now and I intend to stay the course. I do think that you should choose a strategy and stay with it. If you begin bouncing around with your allocation you are likely to outsmart yourself.
Good points! Not sure if I agree with the underlined statement though. Weaker dollar = stronger international earnings, which will lead to higher nominal US stock prices. Observe, for example, the negative correlation between JPY and Nikkei 225 index in its domestic currency, or the explosive performance of US stocks from 2020 until today.

I agree that long term strategic allocation is important. However, for the purposes of constructing a portfolio today, Jack Bogle's argument excludes international stocks. The inception allocation has to come from somewhere.
The relative influence of foreign earnings is much stronger obviously for foreign companies. So, all else being equal, that will favor foreign stocks over US ones should the dollar fall.
Won't USD nominal prices increase also? Falling dollar => more inflation => higher prices of everything, including asset prices. Take rising real estate prices across the US as a directly observable example at the moment. The same is happening for stocks, although the effect is harder to trace.

Now, obviously this relationship will not hold if the same factors that cause USD devaluation also impact economic growth. However, that doesn't seem to be the case so far, particularly when policy is driving a structural decline in interest rates, since the level of national debt does not matter as much as the country's ability to service debt payments.
Yes it will, but this will favor foreign companies more than domestic.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by dan7800 »

Mr Bogle was a VERY smart man. However, he was human and it is ok to disagree with him.

Personally, I believe that one should hold some int.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by mikejuss »

tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
If this is a joke, it's a good one.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by mikejuss »

ApeAttack wrote: Wed Jul 21, 2021 9:28 pm
tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Hmmm... There are like hundreds of threads clearing demonstrating 100% ex-US always outperforms the rest. This is why we call VTSAX "Bogle's Folly."
"We" do?
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by JoMoney »

mikejuss wrote: Wed Jul 21, 2021 10:49 pm
ApeAttack wrote: Wed Jul 21, 2021 9:28 pm
tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Hmmm... There are like hundreds of threads clearing demonstrating 100% ex-US always outperforms the rest. This is why we call VTSAX "Bogle's Folly."
"We" do?
Yes, also "Index Funds" are Un-American so if you buy a U.S. index fund you already have un-American funds. ;)

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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by ApeAttack »

JoMoney wrote: Wed Jul 21, 2021 10:58 pm
mikejuss wrote: Wed Jul 21, 2021 10:49 pm
ApeAttack wrote: Wed Jul 21, 2021 9:28 pm
tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Hmmm... There are like hundreds of threads clearing demonstrating 100% ex-US always outperforms the rest. This is why we call VTSAX "Bogle's Folly."
"We" do?
Yes, also "Index Funds" are Un-American so if you buy a U.S. index fund you already have un-American funds. ;)

Image
You can't spell "index" without "ex".
Just another lazy index investor who recently found out about I-Bonds (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm).
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by ApeAttack »

mikejuss wrote: Wed Jul 21, 2021 10:49 pm
ApeAttack wrote: Wed Jul 21, 2021 9:28 pm
tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
Hmmm... There are like hundreds of threads clearing demonstrating 100% ex-US always outperforms the rest. This is why we call VTSAX "Bogle's Folly."
"We" do?
Yes, "we do."

https://youtu.be/QoSLiHKrzRU
Just another lazy index investor who recently found out about I-Bonds (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm).
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by etfan »

One should follow Bogle's good ideas because they're good ideas, not because they're Bogle's ideas.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by oldcomputerguy »

ApeAttack wrote: Wed Jul 21, 2021 9:28 pm This is why we call VTSAX "Bogle's Folly."
Actually, "Bogle's Folly" referred to the Vanguard First Index Investment Trust, which was Mr. Bogle's first index fund to be introduced to retail investors, and what we now know as the Vanguard 500 Index Fund.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Robot Monster »

Thanks, added this thread to "the list". :wink:

Articles
Happier at Home
Venturing Abroad

Boglehead Discussions
"Does International investment still make sense?" link
"For those concerned about International Stocks..." link
"How many here follow Bogle's 'no international' theory?" link
"How much international stock? A suggestion." link
"How much to hold in international equities (VTIAX)?" link
"How on earth can overweighting US stock over international stock possibly be considered Boglehead?" link
"The International Cap Weight (and Beyond!) Discussion Thread" link
"International under-performance" link
"Long Suffering VXUS Holder No More" link
"Reasons to invest internationally, or not." link
"US vs Intl Total Stock Market" link
"VTSAX or VTWAX over the next 35 years?" link
"VXUS - Why? [Vanguard Total International Stock ETF]" link
"Why are you invested (mainly) in US stocks when all long term forecasts are in favour of ex-US?" link
"Why international?" link
"Yes, another International vs Domestic Thread" link

And also,
VXUS: A Dollar Hedge, Not A Value Investment link
Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks link
Fidelity on International Markets link
Last edited by Robot Monster on Thu Jul 22, 2021 1:53 pm, edited 1 time in total.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Fudgie »

I think there are significant cultural shifts happening in the USA that will make the U.S. more closely aligned with performance seen in the upper tier European states. I expect safety net guarantees to increase, and investment risk to be less richly rewarded in the future.

So, I expect the USA to be less competitive. Diversifying.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by pasadena »

etfan wrote: Thu Jul 22, 2021 12:55 am One should follow Bogle's good ideas because they're good ideas, not because they're Bogle's ideas.
+1
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by atdharris »

He's probably right. I've watched my ex-US holdings flounder around now for over a decade with no end in sight. Maybe someday the experts will be right about them playing catch up, but I am not holding my breath.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by etfan »

This debate is basically the same as the S&P 500 vs. Total Market, and Stocks vs. Bonds. And the answer really is the same every time.

In each of those debates, there's a pretty good chance those who are against the extra diversification turn out to be right: they increase their gains and end up doing well at the end.

But many people choose the extra diversification to reduce their risk at the possible cost of also reducing their gains.

It's just a preference to be prepared for the possibility that things may not go well for the S&P companies, or all companies, or specifically US companies, especially if it happens at the wrong time in their lives (near retirement, after a job loss, etc).
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by ApeAttack »

oldcomputerguy wrote: Thu Jul 22, 2021 8:12 am
ApeAttack wrote: Wed Jul 21, 2021 9:28 pm This is why we call VTSAX "Bogle's Folly."
Actually, "Bogle's Folly" referred to the Vanguard First Index Investment Trust, which was Mr. Bogle's first index fund to be introduced to retail investors, and what we now know as the Vanguard 500 Index Fund.
Don't let reality get in the way of a joke.
Just another lazy index investor who recently found out about I-Bonds (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm).
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by oldcomputerguy »

ApeAttack wrote: Thu Jul 22, 2021 10:36 am
oldcomputerguy wrote: Thu Jul 22, 2021 8:12 am
ApeAttack wrote: Wed Jul 21, 2021 9:28 pm This is why we call VTSAX "Bogle's Folly."
Actually, "Bogle's Folly" referred to the Vanguard First Index Investment Trust, which was Mr. Bogle's first index fund to be introduced to retail investors, and what we now know as the Vanguard 500 Index Fund.
Don't let reality get in the way of a joke.
:happy
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by 02nz »

bikechuck wrote: Wed Jul 21, 2021 9:44 pm With the U.S. skyrocketing national debt the value of the dollar could fall. Should that happen it will favor international equities held by U.S. investors.
To be clear: to benefit from such a fall, or at least to benefit fully, you need to hold international equities in funds that are NOT currency-hedged. AFAIK most of the big ones like VXUS do not hedge for currency.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by eye.surgeon »

tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
I appreciate well crafted sarcasm :sharebeer but I'd rather see 100 threads on this subject, which very well may be the preeminent investing issue of our lifetime, than which brand of dog food costs less per ounce.

My take:
1. Jack was and is right on international investing.
2. The US stock market and US big business has changed such that holding total US provides a huge amount of international exposure, such that the question may very well be moot.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by lostdog »

Nathan Drake wrote: Wed Jul 21, 2021 10:15 pm My reaction is that yes, Bogle is largely correct. International is undervalued because the market is pricing in more risk. The market sees the US as having generally good government, good entrepreneurship, good institutions and protections as Bogle has stated. This is all priced in from the lens of a backwards looking viewpoint. But sentiment can change. Maybe in the future US institutions are not as strong as they once were. Maybe our debt/GDP ratio (currently amongst the highest levels of the developed world) causes issues for the dollar and clamps GDP growth. Sentiment can change, and the market will then adjust to the "riskier" US by reducing valuations from their current levels should that occur.

Therefore investors should expect higher returns from exUS going forward because of the higher discount rate.

It's interesting that he's a lot less definitive in those recent statements than he has been in the past. He even suggests in the video that a global cap weighted portfolio may be the reasonable choice to make. Bogle lived through a period of enormous US exceptionalism, but we are not investing for yesterday and past returns aren't indicative of future performance.
+1

I'm guess the 100% U.S. crowd tend to be from the "boomer" generation. U.S. exceptionalism tends to me more prevalent from this generation. Cognitive Dissonance is a tough nut to crack no matter how much data you throw at them.
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Gort
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Gort »

Da5id wrote: Wed Jul 21, 2021 9:50 pm
PackersFan12 wrote: Wed Jul 21, 2021 8:33 pm https://www.youtube.com/watch?v=P54trh0 ... star%2CInc

What is your reaction to this video?
As you once quite wisely put it viewtopic.php?p=4886409#p4886409
Great post Da5id!
Williams57
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Williams57 »

With all due respect of course, but as a millennial I cannot be expected to invest the same way he did. Different times, hopefully have 40+ years of growth to watch and enjoy. I live in the US, but I can clearly see domination is shifting to Asia. Again, I think the decision depends on your timeframe.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Robot Monster »

Da5id wrote: Wed Jul 21, 2021 9:50 pm
PackersFan12 wrote: Wed Jul 21, 2021 8:33 pm https://www.youtube.com/watch?v=P54trh0 ... star%2CInc

What is your reaction to this video?
As you once quite wisely put it viewtopic.php?p=4886409#p4886409
Oh, I missed that thread. Just added it to my list! link
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shangrila
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by shangrila »

With all the US social unrest and breakdown /division in our gov't can you really say the US has better governance now?
fwellimort
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by fwellimort »

If there's World War III and economy abroad gets crippled again (to the point there's no real 'competition'), then sure.

But part of investing is accepting no one truly knows the 'tomorrow'.
Diversification is the only free lunch passive investors have.

Maybe we should drop US Bonds?
Maybe we should drop US Commodities Stocks?
Maybe we should drop US Energy stocks?

Where does it stop? Chasing performance is 20/20 in hindsight.
Maybe we should just drop it all and go all in tech stocks.
Cause clearly, given enough time, companies that deal with tech will have more innovation than companies like Coca Cola.
And no market can ever 'efficiently price' such phenomena in a course of an investor's lifetime.
Maybe the market priced the next 10 years. But the chance of markets pricing the next 50+ years?
Very doubtful (and the P/E ratios does not indicate such overall over-valuation) and common sense states that one should concentrate more on tech stocks long term (unsurprisingly, almost every country had its tech index outpace the overall market index).
In fact, this thesis makes as much sense to me as the thesis in low cost investing. And those who actually put their money in this practice has done very well for the past century.

Choose an allocation that helps you sleep at night. And don't think too much afterwards.
There's great companies abroad too. I'm sure investors on Tencent, Samsung, Alibaba, etc. have been very happy with their 'international' stocks.

I like to believe both US and International stocks long term will have a positive return that will outpace the current long term bond returns.
And if that's true, I really don't have much preference.

That said, US since 2020 in the 'real' economy hasn't... really done well.
Lots of riots, shootings, suicides, unemployment, etc. (lots of social unrest). We even had US Capitol attack at beginning of this year.
Do we 'really' have better governance relative to other developed nations?
Times have changed a lot since the late 20th and early 21st century when it was unquestionable that US was the country other countries looked up to.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by dbr »

eye.surgeon wrote: Thu Jul 22, 2021 11:17 am
tc101 wrote: Wed Jul 21, 2021 9:04 pm I don't think this has been discussed here before, so I am very interested in what people have to say about it.
I appreciate well crafted sarcasm :sharebeer but I'd rather see 100 threads on this subject, which very well may be the preeminent investing issue of our lifetime, than which brand of dog food costs less per ounce.

My take:
1. Jack was and is right on international investing.
2. The US stock market and US big business has changed such that holding total US provides a huge amount of international exposure, such that the question may very well be moot.
Well, somewhere around 26,000 posts generally on the topic. https://www.google.com/search?sitesearc ... +us+stocks

You are right, though, that people should be thoughtful about this sort of question. It is also true that Mr. Bogle can be heard saying a lot of things about a lot of things that some, or many, or most people posting here don't really agree with.

There is always an incidence of much discussed topics brought up over and over again when lots of discussion could have just been read. But that is OK if the topic is meaningful and someone wants to know, though doing a search might generate more answers faster.

There is a consensus on what fraction of stocks should be international. We all agree that that right proportion is 0% to 50% or maybe a little more. That is not sarcasm but what I believe is an honest summary of the discussion.

As to Vanguard there do from time to time publish white papers on different sorts of investment recommendations. I don't have a link handy but the right Google search would probably turn something up. They have drifted from thinking something like 20% of stocks should be international to more like 40%. Personally I am repulsed by the idea that how they construct their own application funds should be read by anyone as investment advice, but the models are there for consideration. They don't pretend to be doing any of this sort of investment design based on following something Mr. Bogle might have said.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Robot Monster »

fwellimort wrote: Thu Jul 22, 2021 2:06 pm There's great companies abroad too. I'm sure investors on Tencent, Samsung, Alibaba, etc. have been very happy with their 'international' stocks.
There are also great international companies many people just aren't familiar with that they should be, for instance, the Dutch company ASML. There was a New York Times article about it earlier this month, "The Tech Cold War’s ‘Most Complicated Machine’ That’s Out of China’s Reach". The article says manufacturers can’t produce the most advanced chips without it. The machine costs $150 million, is delivered to customers in "40 shipping containers, 20 trucks and three Boeing 747s," is “definitely the most complicated machine humans have built,” said Darío Gil, a senior vice president at IBM, and the US has "successfully lobbied the Dutch government to block shipments of such a machine to China," so it's kinda a big deal.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by McQ »

etfan wrote: Thu Jul 22, 2021 10:05 am This debate is basically the same as the S&P 500 vs. Total Market, and Stocks vs. Bonds. And the answer really is the same every time.
[Quoting etfan but with a shout out to Robot Monster, and acknowledging my newbie status here.]

It is my understanding that John Bogle was no more a fan of the US Total Market Index than he was of international investing. He was a fan of the S&P 500, period. True? And already pursued in many past threads, perhaps?

One can show that since 1926 the S&P index has outperformed the CRSP Total Market index, parallel to how US GT international performance. However, almost all the outperformance came when it was the S&P 90, and was that much farther from a total market index. So BH, strictly defined as followers of Mr. Bogle, can't claim Modern Portfolio Theory in support. Rather, in espousing the S&P 500 as *the* stock investment to own, BH have placed their bet on stock picking, with stock selection outsourced to the S&P index committee. Alternatively, and guessing at the criteria used by that index committee over the decades, BH are factor investors rather than market investors, placing their chips on the Quality factor, with the index committee again defining quality.

Fair?

And again, apologizing in advance for my ignorance of past threads in which these themes may already have been thoroughly explored.
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Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

Post by Marseille07 »

McQ wrote: Thu Jul 22, 2021 3:58 pm It is my understanding that John Bogle was no more a fan of the US Total Market Index than he was of international investing. He was a fan of the S&P 500, period. True? And already pursued in many past threads, perhaps?
My understanding is Mr. Bogle liked US TSM. It is Warren Buffett who prefers S&P500 over US TSM. Mr. Bogle asked Mr. Buffett why, but never got a response.
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