US stocks still look better than anywhere else

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
sabhen
Posts: 175
Joined: Sat Feb 27, 2016 1:03 am

US stocks still look better than anywhere else

Post by sabhen » Wed Jun 05, 2019 4:24 pm

While American outperformance continues to defy history, the rest of the world remains trapped in a bear market.
https://www.bloomberg.com/news/articles ... nd=premium
The U.S. is about to celebrate 10 years of uninterrupted economic growth, but the rest of the world is suffering through a bear market that’s now lasted 12 years. Stock markets around the globe, excluding the U.S., remain 25% below the peak they set on the ominous date of Halloween 2007, on the eve of the financial crisis. The American S&P 500 benchmark has gained about 80% over that time.

Outside the U.S., stock markets have never come close to regaining their highs from before the crisis, and they currently appear to be locked into yet another downswing. The MSCI ACWI ex USA Index, which, as its name indicates, covers all equity markets minus the U.S., has dropped more than 17% since its most recent peak early last year, when there was much excitement about a synchronized global economic recovery.

User avatar
mrspock
Posts: 426
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: US stocks still look better than anywhere else

Post by mrspock » Wed Jun 05, 2019 5:25 pm

Not surprised in the least. Still holding 0% international in my AA, just got back from travels in Europe.... sufficed to say after nearly having to beg for my bill each time so I could leave (you “rent” the table for the night), and get yelled at because I sat at a table to drink my latte (after noon you need to have lunch for a table... even if the place is empty).... I’m not changing my stance :D .

Love the laid back life of Europeans, but the American way to run a business (e.g. emphasis on customer service) is unmatched.

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Wed Jun 05, 2019 5:34 pm

Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

ThankYouJack
Posts: 2817
Joined: Wed Oct 08, 2014 7:27 pm

Re: US stocks still look better than anywhere else

Post by ThankYouJack » Wed Jun 05, 2019 5:41 pm

willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Haha. EMHer here - who also feels I've been accumulating more of a bargain w/ international. Maybe it's because I own 50% international and see the glass half full :)

User avatar
mrspock
Posts: 426
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: US stocks still look better than anywhere else

Post by mrspock » Wed Jun 05, 2019 5:47 pm

willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Well it HAS been at least a week since the last Intl. debate :D . I give this one 12 hours before it degrades into a brawl and gets locked.

To be fair OP is bringing some new data points to table. The actionable thing here is clear: do you reduce or drop intl. exposure?

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Wed Jun 05, 2019 5:50 pm

mrspock wrote:
Wed Jun 05, 2019 5:47 pm
To be fair OP is bringing some new data points to table.
What new points are those? It seems to me that it's just the same story that it's been for a long while now: the U.S. is continuing to outperform ex-U.S. at a significant pace.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

columbia
Posts: 1729
Joined: Tue Aug 27, 2013 5:30 am

Re: US stocks still look better than anywhere else

Post by columbia » Wed Jun 05, 2019 5:51 pm

mrspock wrote:
Wed Jun 05, 2019 5:47 pm
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Well it HAS been at least a week since the last Intl. debate :D . I give this one 12 hours before it degrades into a brawl and gets locked.

To be fair OP is bringing some new data points to table. The actionable thing here is clear: do you reduce or drop intl. exposure?
My action is neither: I go with my current choice and hope for the best. :P

User avatar
mrspock
Posts: 426
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: US stocks still look better than anywhere else

Post by mrspock » Wed Jun 05, 2019 5:55 pm

willthrill81 wrote:
Wed Jun 05, 2019 5:50 pm
mrspock wrote:
Wed Jun 05, 2019 5:47 pm
To be fair OP is bringing some new data points to table.
What new points are those? It seems to me that it's just the same story that it's been for a long while now: the U.S. is continuing to outperform ex-U.S. at a significant pace.
His thesis starts below
The U.S. Dealt With the Crisis—Nobody Else Did
He goes on to explain the actors in the crisis, GDP numbers etc. Sure you can scoff at the data, but I appreciate new information supporting my own thesis, as I do if the data were reversed showing my position was tenuous and ill advised.

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Wed Jun 05, 2019 5:57 pm

mrspock wrote:
Wed Jun 05, 2019 5:55 pm
willthrill81 wrote:
Wed Jun 05, 2019 5:50 pm
mrspock wrote:
Wed Jun 05, 2019 5:47 pm
To be fair OP is bringing some new data points to table.
What new points are those? It seems to me that it's just the same story that it's been for a long while now: the U.S. is continuing to outperform ex-U.S. at a significant pace.
His thesis starts below
The U.S. Dealt With the Crisis—Nobody Else Did
He goes on to explain the actors in the crisis, GDP numbers etc. Sure you can scoff at the data, but I appreciate new information supporting my own thesis, as I do if the data were reversed showing my position was tenuous and ill advised.
Ah, I see. Yes, that's a point I've not heard brought up before. Still, an EMH proponent will say that the market is already aware of that and has priced it in accordingly.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
AerialWombat
Posts: 748
Joined: Tue May 29, 2018 1:07 pm

Re: US stocks still look better than anywhere else

Post by AerialWombat » Wed Jun 05, 2019 5:59 pm

willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Soooo, what you’re saying...the correct answer is 0% US and 0% international? I can buy into that. Let’s hear it for the Martian Index!
“Life doesn’t come with a warranty.” -Michael LeBoeuf

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Wed Jun 05, 2019 6:00 pm

AerialWombat wrote:
Wed Jun 05, 2019 5:59 pm
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Soooo, what you’re saying...the correct answer is 0% US and 0% international? I can buy into that. Let’s hear it for the Martian Index!
Or the correct answer could be 100% in both (i.e. substantial leverage). :wink:
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

SovereignInvestor
Posts: 365
Joined: Mon Aug 20, 2018 4:41 pm

Re: US stocks still look better than anywhere else

Post by SovereignInvestor » Wed Jun 05, 2019 6:22 pm

There is an EMH case for favoring US markets.

The price of all markets reflect all information but much of the price of international markets reflects investors from other countries which do not have the FOREX risk of US investors investing abroad. So the markets may reflect the proper risk premium for domestic investors if dominated by then but frim a US investor the risk premium may be inappropriate to account for US FOREX investment risk.

User avatar
oldzey
Posts: 1315
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: US stocks still look better than anywhere else

Post by oldzey » Wed Jun 05, 2019 6:26 pm

"US stocks still look better than anywhere else"

Yup. :beer
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

heyyou
Posts: 3507
Joined: Tue Feb 20, 2007 4:58 pm

Re: US stocks still look better than anywhere else

Post by heyyou » Wed Jun 05, 2019 7:09 pm

What is the "use by" date on the thread title?

columbia
Posts: 1729
Joined: Tue Aug 27, 2013 5:30 am

Re: US stocks still look better than anywhere else

Post by columbia » Wed Jun 05, 2019 7:30 pm

It’s no mystery as to where the innovation has occurred. The market reflects that.

ardrum
Posts: 43
Joined: Fri Jul 20, 2007 12:39 pm
Location: Ohio

Re: US stocks still look better than anywhere else

Post by ardrum » Wed Jun 05, 2019 8:10 pm

I continue to carry both, as winners often turn to losers and vice versa (though it may take a long time). Looking ahead, I'd rather have the blended return between of US/ex-US than chase the "winning" return and risk getting the "losing" return in the process. Technically I'm still a bit U.S.-tilted with my 60/40, but I'm way more focused on savings rate at this point than US v. ex-US.

https://ibb.co/mcqmgjg
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

User avatar
ReformedSpender
Posts: 358
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: US stocks still look better than anywhere else

Post by ReformedSpender » Wed Jun 05, 2019 8:36 pm

Quantify “growth”.

Plenty of data available showing that the US has merely pushed off/delayed the inevitable; stagnation thanks largely in part to accommodating policies and a select, high-flying equity sectors.

America is not immune to the same issues being dealt around other areas of the world...
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

visualguy
Posts: 1461
Joined: Thu Jan 30, 2014 1:32 am

Re: US stocks still look better than anywhere else

Post by visualguy » Thu Jun 06, 2019 2:20 am

ReformedSpender wrote:
Wed Jun 05, 2019 8:36 pm
Quantify “growth”.

Plenty of data available showing that the US has merely pushed off/delayed the inevitable; stagnation thanks largely in part to accommodating policies and a select, high-flying equity sectors.

America is not immune to the same issues being dealt around other areas of the world...
Yeah, but at least the US has those policies and the high-flying equity sectors... Even if the US market starts stagnating like Europe, Japan, etc. at some point, it will still look better for US investors due to the lack of foreign taxes and currency risk.

User avatar
ReformedSpender
Posts: 358
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: US stocks still look better than anywhere else

Post by ReformedSpender » Thu Jun 06, 2019 4:57 am

None of that is a guarantee Visualguy. Sounds like perpetual recency bias imo

Diversify, diversify, diversify
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

User avatar
jeffyscott
Posts: 8060
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: US stocks still look better than anywhere else

Post by jeffyscott » Thu Jun 06, 2019 7:49 am

While the headline is: U.S. Stocks Still Look Better Than Anywhere Else, the final sentence is: Did the U.S. really avert the usual fate that befalls countries after a major crisis, or has it merely postponed it?

Does the article actually make a case that US stocks still look better? It seems to me that it doesn't, it just presents some possible reasons why the has US performed better in the recent past. Were any of these reasons predictable 10 or more years ago? Do they lead to a prediction that that US stocks will continue to outperform EAFE?

1. US growth was greater than that for other developed countries
2. U.S. Dealt With the Crisis to a greater extent than others
3. FAANG stocks
4. U.S. has merely postponed the "usual fate"
Time is your friend; impulse is your enemy. - John C. Bogle

selters
Posts: 647
Joined: Thu Feb 27, 2014 9:26 am

Re: US stocks still look better than anywhere else

Post by selters » Thu Jun 06, 2019 8:04 am

US have still outperformed ex-US since 2008. From 1945 to 2008, ex-US stocks outperformed US stocks, although not by much. The future is uncertain.

WillRetire
Posts: 186
Joined: Mon Jun 05, 2017 10:01 am

Re: US stocks still look better than anywhere else

Post by WillRetire » Thu Jun 06, 2019 8:13 am

I would believe that headline *IF* I believed that it is wise to invest in markets that have performed outstandingly well over the past 10 years, and avoid those that didn't.

I don't believe that, so, I will stay the course... stick with carefully considered AA with a designated % in foreign markets including emerging.

Bloomberg has to publish something. Why not articles like this one: Buy this! Look how well it has done! Don't buy that! Look how poorly it has done!

Have to sell clicks.

asif408
Posts: 1733
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: US stocks still look better than anywhere else

Post by asif408 » Thu Jun 06, 2019 8:45 am

Well, it is true as a market cap whole the rest of the world has performed worse. But not all countries have in the last several years, particularly in the emerging markets. For instance, the Russian and Brazilian stock markets have handily outperformed the US stock market since January 2016. Even the Chinese stock market has had comparable performance to the US market over that time period. And if you invested in one of the EM value funds available out there, such as PXH (which GMO and the likes have been pounding the table on for years now), you are still ahead of US stocks, even after last year's dismal showing by EM: http://quotes.morningstar.com/chart/etf ... 2%3A955%7D

Please don't accuse me of cherry picking the time frame. I did.
Last edited by asif408 on Thu Jun 06, 2019 9:06 am, edited 2 times in total.

donaldfair71
Posts: 485
Joined: Wed Mar 06, 2013 4:15 pm

Re: US stocks still look better than anywhere else

Post by donaldfair71 » Thu Jun 06, 2019 8:49 am

willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
I'm telling you there's a bot that kicks off the debate about 15 times a year.

I am 75/25 because it feels right to me, but no one knows nothing.

donaldfair71
Posts: 485
Joined: Wed Mar 06, 2013 4:15 pm

Re: US stocks still look better than anywhere else

Post by donaldfair71 » Thu Jun 06, 2019 8:58 am

ReformedSpender wrote:
Wed Jun 05, 2019 8:36 pm
Quantify “growth”.

Plenty of data available showing that the US has merely pushed off/delayed the inevitable; stagnation thanks largely in part to accommodating policies and a select, high-flying equity sectors.

America is not immune to the same issues being dealt around other areas of the world...
Kind of my take on it too. There's nothing magical about the US Market, and it's just as possible the the US has kicked the can on "paying up" for the crisis as it is that it dealt with it and made it through to the other side.

Again, I don't know. But neither does anyone else.

typical.investor
Posts: 964
Joined: Mon Jun 11, 2018 3:17 am

Re: US stocks still look better than anywhere else

Post by typical.investor » Thu Jun 06, 2019 9:12 am

sabhen wrote:
Wed Jun 05, 2019 4:24 pm
While American outperformance continues to defy history, the rest of the world remains trapped in a bear market.
https://www.bloomberg.com/news/articles ... nd=premium
Stock markets around the globe, excluding the U.S., remain 25% below the peak they set on the ominous date of Halloween 2007, on the eve of the financial crisis.
I simply don't believe that Bloomberg's data is accurate. Perhaps it's price only but given that international returns more via dividends, of what use is looking at that?

lostdog
Posts: 1852
Joined: Thu Feb 04, 2016 2:15 pm

Re: US stocks still look better than anywhere else

Post by lostdog » Thu Jun 06, 2019 9:31 am

oldzey wrote:
Wed Jun 05, 2019 6:26 pm
"US stocks still look better than anywhere else"

Yup. :beer

Here we go again. Another confirmation bias thread.

The weekly or bi weekly self pat on the back from the same crowd over and over. It's like they constantly have to talk themselves into it to make their decision valid. I think they call this "Confirmation Bias".
VT/VTWAX+BNDW

lostdog
Posts: 1852
Joined: Thu Feb 04, 2016 2:15 pm

Re: US stocks still look better than anywhere else

Post by lostdog » Thu Jun 06, 2019 9:33 am

mrspock wrote:
Wed Jun 05, 2019 5:25 pm
Not surprised in the least. Still holding 0% international in my AA, just got back from travels in Europe.... sufficed to say after nearly having to beg for my bill each time so I could leave (you “rent” the table for the night), and get yelled at because I sat at a table to drink my latte (after noon you need to have lunch for a table... even if the place is empty).... I’m not changing my stance :D .

Love the laid back life of Europeans, but the American way to run a business (e.g. emphasis on customer service) is unmatched.
Read between the lines new investors. Don't invest based on political and ideological reason.
VT/VTWAX+BNDW

lostdog
Posts: 1852
Joined: Thu Feb 04, 2016 2:15 pm

Re: US stocks still look better than anywhere else

Post by lostdog » Thu Jun 06, 2019 9:34 am

willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Yep, I agree. Check out my earlier reply. This reeks of the constant confirmation bias spewed out over and over.
VT/VTWAX+BNDW

SovereignInvestor
Posts: 365
Joined: Mon Aug 20, 2018 4:41 pm

Re: US stocks still look better than anywhere else

Post by SovereignInvestor » Thu Jun 06, 2019 9:34 am

US stocks all else equal will look more attractive to US investors. The international markets aren't necessarily dominated by US investors who have FOREX risk so no FOREX risk premium is priced in perhaps. Yet if US investors invest overseas they incur FOREX risk and likely aren't getting premium for it, where they don't incur the same magnitude of FOREX risk in US markets.

That is the case for favoring US stocks. It doesn't mean foreign stocks would be avoided but perhaps a reduced allocation compared to what otherwise would be optimal.

This is said with the notion that US total market has around 40% of earnings overseas so even US only investors still have FOREX risk so tilting towards international stocks heavily can increase that risk substantially without necessarily an explicit risk premium per EMH.
Last edited by SovereignInvestor on Thu Jun 06, 2019 9:38 am, edited 3 times in total.

lostdog
Posts: 1852
Joined: Thu Feb 04, 2016 2:15 pm

Re: US stocks still look better than anywhere else

Post by lostdog » Thu Jun 06, 2019 9:35 am

columbia wrote:
Wed Jun 05, 2019 5:51 pm
mrspock wrote:
Wed Jun 05, 2019 5:47 pm
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Well it HAS been at least a week since the last Intl. debate :D . I give this one 12 hours before it degrades into a brawl and gets locked.

To be fair OP is bringing some new data points to table. The actionable thing here is clear: do you reduce or drop intl. exposure?
My action is neither: I go with my current choice and hope for the best. :P
When international will outperform, you'll be hand wringing and maybe lose some sleep.
VT/VTWAX+BNDW

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Thu Jun 06, 2019 9:36 am

lostdog wrote:
Thu Jun 06, 2019 9:31 am
oldzey wrote:
Wed Jun 05, 2019 6:26 pm
"US stocks still look better than anywhere else"

Yup. :beer

Here we go again. Another confirmation bias thread.

The weekly or bi weekly self pat on the back from the same crowd over and over. It's like they constantly have to talk themselves into it to make their decision valid. I think they call this "Confirmation Bias".
Considering the comparative returns of the U.S. vs. ex-U.S. for a while now, I don't think that the U.S.-only folks have to do much convincing of themselves.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

lostdog
Posts: 1852
Joined: Thu Feb 04, 2016 2:15 pm

Re: US stocks still look better than anywhere else

Post by lostdog » Thu Jun 06, 2019 9:38 am

donaldfair71 wrote:
Thu Jun 06, 2019 8:49 am
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
I'm telling you there's a bot that kicks off the debate about 15 times a year.

I am 75/25 because it feels right to me, but no one knows nothing.
They do it for confirmation. There is a tiny part of them that knows it's a gamble. They need constant reassurance of their bad decision.
VT/VTWAX+BNDW

User avatar
jeffyscott
Posts: 8060
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: US stocks still look better than anywhere else

Post by jeffyscott » Thu Jun 06, 2019 9:40 am

typical.investor wrote:
Thu Jun 06, 2019 9:12 am
sabhen wrote:
Wed Jun 05, 2019 4:24 pm
While American outperformance continues to defy history, the rest of the world remains trapped in a bear market.
https://www.bloomberg.com/news/articles ... nd=premium
Stock markets around the globe, excluding the U.S., remain 25% below the peak they set on the ominous date of Halloween 2007, on the eve of the financial crisis.
I simply don't believe that Bloomberg's data is accurate. Perhaps it's price only but given that international returns more via dividends, of what use is looking at that?
Yeah, that part must be price only, but total return of VTIAX and MSCI ACWI Ex USA are both just barely above 0 from 10/31/07 to today. Meanwhile the S&P 500 has more than doubled, so they are also understating that as the article says it is up 80%.

So the article has a 95% difference in returns (-15% vs. +80%), while when looking at total return it is a difference of about 130% (~137% vs. ~7%).

Image
Time is your friend; impulse is your enemy. - John C. Bogle

TheOscarGuy
Posts: 879
Joined: Sat Oct 06, 2012 1:10 pm
Location: Where I wanna be.

Re: US stocks still look better than anywhere else

Post by TheOscarGuy » Thu Jun 06, 2019 9:46 am

mrspock wrote:
Wed Jun 05, 2019 5:25 pm
Not surprised in the least. Still holding 0% international in my AA, just got back from travels in Europe.... sufficed to say after nearly having to beg for my bill each time so I could leave (you “rent” the table for the night), and get yelled at because I sat at a table to drink my latte (after noon you need to have lunch for a table... even if the place is empty).... I’m not changing my stance :D .

Love the laid back life of Europeans, but the American way to run a business (e.g. emphasis on customer service) is unmatched.
International is not just Europe.

SovereignInvestor
Posts: 365
Joined: Mon Aug 20, 2018 4:41 pm

Re: US stocks still look better than anywhere else

Post by SovereignInvestor » Thu Jun 06, 2019 9:46 am

Much of the difference is the USD skyrocketing from 2011 to present. The dollar index was in the 70s in 2011 and now it is around 100.

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Thu Jun 06, 2019 9:49 am

SovereignInvestor wrote:
Thu Jun 06, 2019 9:46 am
Much of the difference is the USD skyrocketing from 2011 to present. The dollar index was in the 70s in 2011 and now it is around 100.
Currency risk is very real.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

TheOscarGuy
Posts: 879
Joined: Sat Oct 06, 2012 1:10 pm
Location: Where I wanna be.

Re: US stocks still look better than anywhere else

Post by TheOscarGuy » Thu Jun 06, 2019 9:49 am

willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
The last part is precisely what I wanted to say.
You pick your AA and stick to it.
So because last 10 years for international were bad, does that not mean it is right time to buy international, when everyone else is running from it?

Tamalak
Posts: 606
Joined: Fri May 06, 2016 2:29 pm

Re: US stocks still look better than anywhere else

Post by Tamalak » Thu Jun 06, 2019 9:54 am

I don't get it. If the market is even a little bit efficient, how can international have inferior returns week after week after week?

If it was like a sudden correction once due to new information that would be one thing. But I play a game where I look at VTI and ask "ok how much worse is international". 80% of the time it's worse.

I'm 100% down with keeping my global portfolio if these prices are truly market driven. Either domestic or international were bound to be disappointing compared to the other. But I get a nagging feeling that something is wrong.
Last edited by Tamalak on Thu Jun 06, 2019 9:56 am, edited 1 time in total.

SovereignInvestor
Posts: 365
Joined: Mon Aug 20, 2018 4:41 pm

Re: US stocks still look better than anywhere else

Post by SovereignInvestor » Thu Jun 06, 2019 9:55 am

willthrill81 wrote:
Thu Jun 06, 2019 9:49 am
SovereignInvestor wrote:
Thu Jun 06, 2019 9:46 am
Much of the difference is the USD skyrocketing from 2011 to present. The dollar index was in the 70s in 2011 and now it is around 100.
Currency risk is very real.
Exactly. But I don't see how US investors investing abroad are explicitly compensated. If a foreign market risk premium developed to compensate US investors, then foreign investors would be better off over weighting their own stock markets so EMH says it wont exist.

So EMH says US investors may not be better off with massive foreign allocation. There is a point on efficient frontier where foreign market exposure is optimal.

There's already FOREX Exposure in the S&P.

Making up numbers, but Going from say 0 to 20% of equities explicitly overseas may be helpful because it reduces and diversified away US market risk without substantially increasing FOREX risk but say going from 20% to 50% may diviserfiy US market risk more but increase FOREX risk so much it negates the benefit.

There is an optimal foreign market exposure point, and I believe it is lower than many think because FOREX risk is real and US investors already have it in US stocks like S&p 500.

donaldfair71
Posts: 485
Joined: Wed Mar 06, 2013 4:15 pm

Re: US stocks still look better than anywhere else

Post by donaldfair71 » Thu Jun 06, 2019 9:56 am

TheOscarGuy wrote:
Thu Jun 06, 2019 9:49 am
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
The last part is precisely what I wanted to say.
You pick your AA and stick to it.
So because last 10 years for international were bad, does that not mean it is right time to buy international, when everyone else is running from it?
What you say is very important. It seems to me that if one chose to be 50/50, 0/100, 100/0, whatever, the important thing is to just stick with it. Not that anyone is wrong, or anyone is right, or anything like that. Just that, for the whole portfolio construction/DCA/All the stuff we do as investors to work, you can't change gameplans midstream.

Unfortunately, I fear a lot of people will change midstream when a few years of Ex-US outperform happens, when that's the worst thing one can do (or the worst time to do it).

donaldfair71
Posts: 485
Joined: Wed Mar 06, 2013 4:15 pm

Re: US stocks still look better than anywhere else

Post by donaldfair71 » Thu Jun 06, 2019 9:58 am

Tamalak wrote:
Thu Jun 06, 2019 9:54 am
I don't get it. If the market is even a little bit efficient, how can international have inferior returns week after week after week?

If it was like a sudden correction once due to new information that would be one thing. But I play a game where I look at VTI and ask "ok how much worse is international". 80% of the time it's worse.

I'm 100% down with keeping my global portfolio if these prices are truly market driven. Either domestic or international were bound to be disappointing compared to the other. But I get a nagging feeling that something is wrong.
Fair. You're not wrong to think like this. It's why diversification is really hard to do sometimes.

Just understand that the same post could have been made in 2009, but flip international and US.

SovereignInvestor
Posts: 365
Joined: Mon Aug 20, 2018 4:41 pm

Re: US stocks still look better than anywhere else

Post by SovereignInvestor » Thu Jun 06, 2019 10:07 am

donaldfair71 wrote:
Thu Jun 06, 2019 9:56 am
TheOscarGuy wrote:
Thu Jun 06, 2019 9:49 am
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
The last part is precisely what I wanted to say.
You pick your AA and stick to it.
So because last 10 years for international were bad, does that not mean it is right time to buy international, when everyone else is running from it?
What you say is very important. It seems to me that if one chose to be 50/50, 0/100, 100/0, whatever, the important thing is to just stick with it. Not that anyone is wrong, or anyone is right, or anything like that. Just that, for the whole portfolio construction/DCA/All the stuff we do as investors to work, you can't change gameplans midstream.

Unfortunately, I fear a lot of people will change midstream when a few years of Ex-US outperform happens, when that's the worst thing one can do (or the worst time to do it).
Yeah many may flock away from international stocks bevause chasing US performance.

It reminds me of the affinity for small cap S&P 600 because it crushed the S&P 500 since 2000. IMO it mostly did it because large caps were.in a bubble in 2000 at 25 forward PE (big tech weighed it a lot) while small caps were more moderate at 17 PE. So.most of the performance difference was valuation normalization. Now small caps trade at PE premium to.Large caps so its hard for that magnitude of outperformance (about 2-3 percentage points in favor of small caps since 2000) to.repeat.

Much of internationals stocks under performance for last 10 years was FOREX and it is hard for USD to appreciation that much again.

BigMoneyNoWhammies
Posts: 207
Joined: Tue Jul 11, 2017 11:58 am

Re: US stocks still look better than anywhere else

Post by BigMoneyNoWhammies » Thu Jun 06, 2019 10:19 am

mrspock wrote:
Wed Jun 05, 2019 5:47 pm
willthrill81 wrote:
Wed Jun 05, 2019 5:34 pm
Here we go on the U.S./ex. U.S. merry-go-round again.

"Bogle was right! Ex-U.S. has gone nowhere for decades! The U.S. is the cat's meow!" etc. etc.

"Bogle was just lucky. The EMH says that everything is priced in. You just believe in the ridiculous American 'exceptionalism' argument and past performance." etc. etc.

ad nauseum
Well it HAS been at least a week since the last Intl. debate :D . I give this one 12 hours before it degrades into a brawl and gets locked.

To be fair OP is bringing some new data points to table. The actionable thing here is clear: do you reduce or drop intl. exposure?
Can't reduce what I never had.

+1 that the intl vs US domestic investing debates are exhausting. In the entirety of my time on this board I have yet to see one person with a clear stance on this issue be swayed by the arguments of someone taking the opposing view. Pointless debate.

MichCPA
Posts: 670
Joined: Fri Jul 06, 2018 9:06 pm

Re: US stocks still look better than anywhere else

Post by MichCPA » Thu Jun 06, 2019 10:26 am

ReformedSpender wrote:
Wed Jun 05, 2019 8:36 pm
Quantify “growth”.

Plenty of data available showing that the US has merely pushed off/delayed the inevitable; stagnation thanks largely in part to accommodating policies and a select, high-flying equity sectors.

America is not immune to the same issues being dealt around other areas of the world...
One might argue that the rest of the world has been even more accomodative than the US.

Valuethinker
Posts: 38382
Joined: Fri May 11, 2007 11:07 am

Re: US stocks still look better than anywhere else

Post by Valuethinker » Thu Jun 06, 2019 10:35 am

mrspock wrote:
Wed Jun 05, 2019 5:25 pm
Not surprised in the least. Still holding 0% international in my AA, just got back from travels in Europe.... sufficed to say after nearly having to beg for my bill each time so I could leave (you “rent” the table for the night), and get yelled at because I sat at a table to drink my latte (after noon you need to have lunch for a table... even if the place is empty).... I’m not changing my stance :D .

Love the laid back life of Europeans, but the American way to run a business (e.g. emphasis on customer service) is unmatched.
I must admit all of Rick Steves' comments about American tourists came flooding back ...

Fortunately many Americans I know (other than business people - and business people often make obnoxious guests) are sophisticated global cosmopolitans and revel in the differences of other countries v. their own. A common refrain is "why don't we have xxx like this at home"?

Another very American attribute is to reflect full and emotional delight at the discovery of, say, Italian ice cream or a good English pub or a glorious stained glass window. That kind of open expression of enthusiasm and of emotion is just not British and generally not European.

When another alcohol-fuelled British stag party or hen do is causing at the very least disturbance and at the worst outright havoc in some pretty European city - Prague, Bratislava, Riga etc ... I curse the inventor of the discount airline. The British tendency to treat every city as if it is Blackpool ... Some people should not be given passports ... or at least alcohol should not be sold to (emotional) minors outside of their home country ...

User avatar
mrspock
Posts: 426
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: US stocks still look better than anywhere else

Post by mrspock » Thu Jun 06, 2019 10:45 am

Valuethinker wrote:
Thu Jun 06, 2019 10:35 am
mrspock wrote:
Wed Jun 05, 2019 5:25 pm
Not surprised in the least. Still holding 0% international in my AA, just got back from travels in Europe.... sufficed to say after nearly having to beg for my bill each time so I could leave (you “rent” the table for the night), and get yelled at because I sat at a table to drink my latte (after noon you need to have lunch for a table... even if the place is empty).... I’m not changing my stance :D .

Love the laid back life of Europeans, but the American way to run a business (e.g. emphasis on customer service) is unmatched.
I must admit all of Rick Steves' comments about American tourists came flooding back ...

Fortunately many Americans I know (other than business people - and business people often make obnoxious guests) are sophisticated global cosmopolitans and revel in the differences of other countries v. their own. A common refrain is "why don't we have xxx like this at home"?

Another very American attribute is to reflect full and emotional delight at the discovery of, say, Italian ice cream or a good English pub or a glorious stained glass window. That kind of open expressiveness of emotion is just not British and generally not European.
First don’t equate my private thoughts with my actions. I was perfectly polite, and behaved to local customs (I always look them up). Only a fool would be rude to those acting within the boundaries of their customs. My point here, is that one “custom” makes more money... one doesn’t .

It’s not a value judgement, for Europeans in certain this way of doing things is preferred (for example you rent the space because entertaining spaces in homes are smaller).
My point is, the end result is companies will make less money. Same goes for Americans “work ethic”, horrible for work life balance and families, great for shareholders/investors.

I’m also not American... I’m an outsider looking in.

User avatar
willthrill81
Posts: 11796
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: US stocks still look better than anywhere else

Post by willthrill81 » Thu Jun 06, 2019 11:44 am

SovereignInvestor wrote:
Thu Jun 06, 2019 9:55 am
willthrill81 wrote:
Thu Jun 06, 2019 9:49 am
SovereignInvestor wrote:
Thu Jun 06, 2019 9:46 am
Much of the difference is the USD skyrocketing from 2011 to present. The dollar index was in the 70s in 2011 and now it is around 100.
Currency risk is very real.
Exactly. But I don't see how US investors investing abroad are explicitly compensated.
Currency risk is an uncompensated risk. That's one of the very logical drawbacks to investing in foreign markets; you must take on currency risk, but the expected return for taking on that risk is zero. For many, the benefit of added diversification, particularly the reduction of country risk, makes the currency risk worthwhile. Taxes on foreign earnings are another expense from foreign investing.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
oldzey
Posts: 1315
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: US stocks still look better than anywhere else

Post by oldzey » Thu Jun 06, 2019 12:22 pm

willthrill81 wrote:
Thu Jun 06, 2019 9:36 am
lostdog wrote:
Thu Jun 06, 2019 9:31 am
oldzey wrote:
Wed Jun 05, 2019 6:26 pm
"US stocks still look better than anywhere else"

Yup. :beer

Here we go again. Another confirmation bias thread.

The weekly or bi weekly self pat on the back from the same crowd over and over. It's like they constantly have to talk themselves into it to make their decision valid. I think they call this "Confirmation Bias".
Considering the comparative returns of the U.S. vs. ex-U.S. for a while now, I don't think that the U.S.-only folks have to do much convincing of themselves.
I confirm that 0% international works (quite well) for me as a U.S. investor! :beer
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

fennewaldaj
Posts: 769
Joined: Sun Oct 22, 2017 11:30 pm

Re: US stocks still look better than anywhere else

Post by fennewaldaj » Thu Jun 06, 2019 1:10 pm

Tamalak wrote:
Thu Jun 06, 2019 9:54 am
I don't get it. If the market is even a little bit efficient, how can international have inferior returns week after week after week?

If it was like a sudden correction once due to new information that would be one thing. But I play a game where I look at VTI and ask "ok how much worse is international". 80% of the time it's worse.
EMH would set expected return to a similar level between the two markets. Realized return will always be different than expected return. Basically the new information out of ex-US has been worse for the last decade and thus so have returns.

Post Reply