Know when to hold them and when to fold them......

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midareff
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Know when to hold them and when to fold them......

Post by midareff » Tue Oct 01, 2019 4:53 pm

A discussion among many on the concept of developing your plan and holding it regardless of how future results come in. Let's use Total International as an example for this discussion. You read books, ... Bernstein, Ferri, Bogle, Swedroe and so forth. You read threads on this forum which would lead you to develop the concept you want to hold 40% of your equities as international. You read stay the course hundreds if not thousands of times.

You sit, you watch, you rebalance into and into and into as it systematically under performs over a long term. All the while Bogle's no more than 20% if you must and Buffet's none keep going through your head.

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.

Let's further suppose you got old..... >70 .... and your holding period is never going to be another 30 or 40 years...... and you have traveled Europe and seen changes since you traveled there 4 years ago.

Like Jack and Warren I believe in the capitalistic model we presently have.

Have you changed or rethought your international exposure lately and what did you do if anything?

H-Town
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Re: Know when to hold them and when to fold them......

Post by H-Town » Tue Oct 01, 2019 4:56 pm

I have my aces in International Equity position. There's no way I'd fold now.

On the flip side, I'm out of aces in U.S. equity position. I'm counting my luck in the future years when it comes to U.S. equity. A scary thought...

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Re: Know when to hold them and when to fold them......

Post by marcopolo » Tue Oct 01, 2019 5:12 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm
A discussion among many on the concept of developing your plan and holding it regardless of how future results come in. Let's use Total International as an example for this discussion. You read books, ... Bernstein, Ferri, Bogle, Swedroe and so forth. You read threads on this forum which would lead you to develop the concept you want to hold 40% of your equities as international. You read stay the course hundreds if not thousands of times.

You sit, you watch, you rebalance into and into and into as it systematically under performs over a long term. All the while Bogle's no more than 20% if you must and Buffet's none keep going through your head.

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.

Let's further suppose you got old..... >70 .... and your holding period is never going to be another 30 or 40 years...... and you have traveled Europe and seen changes since you traveled there 4 years ago.

Like Jack and Warren I believe in the capitalistic model we presently have.

Have you changed or rethought your international exposure lately and what did you do if anything?
My observation has been that all the experts that tell you to "stay the course", "be patient", etc. have all changed course from time to time. They attribute it (after the fact), to having learned "new information". Since there is ALWAYS new information becoming available, it is not at all clear to me how one decides when to "stay the course" in face of all the new information, versus when to make adjustments to your plans. If you figure it out, please do let us know.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: Know when to hold them and when to fold them......

Post by CyclingDuo » Tue Oct 01, 2019 5:26 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm
A discussion among many on the concept of developing your plan and holding it regardless of how future results come in. Let's use Total International as an example for this discussion. You read books, ... Bernstein, Ferri, Bogle, Swedroe and so forth. You read threads on this forum which would lead you to develop the concept you want to hold 40% of your equities as international. You read stay the course hundreds if not thousands of times.

You sit, you watch, you rebalance into and into and into as it systematically under performs over a long term. All the while Bogle's no more than 20% if you must and Buffet's none keep going through your head.

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.

Let's further suppose you got old..... >70 .... and your holding period is never going to be another 30 or 40 years...... and you have traveled Europe and seen changes since you traveled there 4 years ago.

Like Jack and Warren I believe in the capitalistic model we presently have.

Have you changed or rethought your international exposure lately and what did you do if anything?
The majority of the difference being due to the percentage of technology companies and communication services within US vs. International Stock Index Funds.

There's only 8.44% in technology for the Vanguard International Index Fund + another 6.48% for communication services. There is 21.33% in technology for the Vanguard US Total Stock Market Fund + another 9.55% in communication services!!!

Strip those out, and I would imagine that performance is not much different between the two for all the other remaining sectors - outside of the usual pockets of business cycles not always being in sync on all sides of the ponds, currency, interest rates/multiples, etc... .
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Know when to hold them and when to fold them......

Post by Jack FFR1846 » Tue Oct 01, 2019 5:33 pm

A well thought out change in plans is perfectly acceptable. You develop an IPS. Then you learn more. The more informed you now challenges previous assumptions. I did that. My initial AA was somewhat developed from an age in bonds and 30% of equity international perspective. I've watched videos and read numerous Jack Bogle pieces and have come to think his lack of international may carry weight. So I've disconnected my international and no longer add to it or rebalance it. Dividends get used to buy US equity. It's my way of easing out of international. I also hit 50/50 in stock/bond and decided not to continue upping bonds with age. I froze it there.

As time goes by, if I feel I've learned something that would change my course, I'm going to think about it for a long while and if I still think the change is due, I'll make the change.
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livesoft
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Re: Know when to hold them and when to fold them......

Post by livesoft » Tue Oct 01, 2019 5:40 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm
Have you changed or rethought your international exposure lately and what did you do if anything?
I haven't rebalanced into international in quite some time. I reinvest the occasional international fund dividend or not, but my percentage of international has drifted lower. The main reason is that Great Britain and Europe in general cannot get their act together plus emerging markets in the form of China is being actively suppressed.

But that doesn't mean I hold 0% in foreign equities.

I think there will come a time when foreign stocks will be good to have, so keep your eyes open.
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Re: Know when to hold them and when to fold them......

Post by harvestbook » Tue Oct 01, 2019 5:44 pm

I eased off my international (which was formerly 50 percent of my equities) down to just under 40 percent. But the persistent recency bias and home bias does give me comfort that international will have its day before I ever need to sell anything. So the answer for me is, I never know when to fold them, and I hope I never do.
I'm not smart enough to know, and I can't afford to guess.

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Re: Know when to hold them and when to fold them......

Post by friar1610 » Tue Oct 01, 2019 6:07 pm

I've never been comfortable with the 40% international school of thought. So I've been a 20-25%-er for quite a while. Between guaranteed income streams and a (modest and conservative) diversified portfolio I feel reasonably confident that my spouse &I will make it to the finish line without resorting to cat food. So I'll stick with 20-25% for the duration.
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Re: Know when to hold them and when to fold them......

Post by RadAudit » Tue Oct 01, 2019 6:13 pm

"t is not at all clear to me how one decides when to "stay the course" in face of all the new information, versus when to make adjustments to your plans. If you figure it out, please do let us know.nice"

If it's not in your IPS, when you decide to market time, you rationalize and call it new information😉
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Know when to hold them and when to fold them......

Post by DonIce » Tue Oct 01, 2019 6:19 pm

Looking at the past 5, 10, 20, or even 50 years of returns and comparing isn't enough to formulate any kind of informed opinion about the future. The default "know nothing" position is to hold the world market cap of US and ex-US equities (which is pretty close to 50/50 right now).

If you want to go any deeper than that, you should try to understand why the US has outperformed over the past whatever period, and whether whatever causes that out-performance is likely to continue or not. Personally I think that US outperformance relative to most of the rest of the world, which has consistently been the case for the last ~300 years, is likely now coming to an end. The reasoning behind this could be discussed at length and probably is outside the scope of this thread.

As you assess, remember that obvious differences between countries are already taken into account in valuations, that's why US stock indices are more expensive (in terms of P/E ratio) than the most foreign stock indices. Valuations already express the consensus view of the markets, so that the expected risk/reward proposition of international stocks should match that of US stocks according to the median view of market participants. The only reason to bet on a different ratio than the world market cap is if you believe your opinion is more correct than the market consensus.

There's plenty of people that tilt towards American stocks and away from international stocks because of a belief that America is more business friendly, that laws better protect investors, and because of the history of better performance over certain time periods. But these factors are widely known and already built into the price. What do you know that the market doesn't?

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Re: Know when to hold them and when to fold them......

Post by Ged » Tue Oct 01, 2019 6:30 pm

The things you know are personal circumstances. Risk tolerance. Time horizon. Etc.

These are why there is no universal answer.

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Re: Know when to hold them and when to fold them......

Post by Willmunny » Tue Oct 01, 2019 6:33 pm

The past is in the past. You can't buy the past.

I am not one of those posters who believes you can never change your IPS if facts and circumstances indeed change. For example, I have moved away from bond funds and put more of my fixed income into CDs than I did a decade ago. A decade ago my IPS would have said put those funds into something like BND. But I thought long and hard, and I came to the conclusion that I no longer felt like that made sense given the current environment.

If I were you, I would take some time to think about whether you truly believe U.S. equities will significantly outperform foreign equities over your remaining life expectancy, or if your regrets with respect to what could have been are being used as a justification for buying something (more U.S. equities) on price strength. Only you can make that determination.

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Re: Know when to hold them and when to fold them......

Post by dmcmahon » Tue Oct 01, 2019 6:49 pm

livesoft wrote:
Tue Oct 01, 2019 5:40 pm
midareff wrote:
Tue Oct 01, 2019 4:53 pm
Have you changed or rethought your international exposure lately and what did you do if anything?
I haven't rebalanced into international in quite some time. I reinvest the occasional international fund dividend or not, but my percentage of international has drifted lower. The main reason is that Great Britain and Europe in general cannot get their act together plus emerging markets in the form of China is being actively suppressed.

But that doesn't mean I hold 0% in foreign equities.

I think there will come a time when foreign stocks will be good to have, so keep your eyes open.
I’ve also opted to just let the percentage drift down over time as it’s underperformed. I avoid tax side effects as a bonus.

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Re: Know when to hold them and when to fold them......

Post by arcticpineapplecorp. » Tue Oct 01, 2019 6:53 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm
A discussion among many on the concept of developing your plan and holding it regardless of how future results come in. Let's use Total International as an example for this discussion. You read books, ... Bernstein, Ferri, Bogle, Swedroe and so forth. You read threads on this forum which would lead you to develop the concept you want to hold 40% of your equities as international. You read stay the course hundreds if not thousands of times.

You sit, you watch, you rebalance into and into and into as it systematically under performs over a long term. All the while Bogle's no more than 20% if you must and Buffet's none keep going through your head.

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.

Let's further suppose you got old..... >70 .... and your holding period is never going to be another 30 or 40 years...... and you have traveled Europe and seen changes since you traveled there 4 years ago.

Like Jack and Warren I believe in the capitalistic model we presently have.

Have you changed or rethought your international exposure lately and what did you do if anything?
1. If you want to follow what Jack said, then don't go higher than 20% int. (or none at all. he didn't think it was necessary). But Jack also invested in his son's actively managed mutual funds. Are you going to invest in actively managed mutual funds too?

2. Buffett owns no international? They may be a small part of his portfolio, but that doesn't mean zero.
And last year, Berkshire bought a $60 million stake in Teva Pharmaceutical, which is an Israeli outfit. This is a real value play because the drug firm is stumbling under its large debt load.

source: https://www.ai-cio.com/news/warren-buff ... gn-stocks/
don't forget:
Of course, many of the holdings in Berkshire Hathaway — such as Apple, Coca-Cola, and Proctor and Gamble — do significant business overseas. Many of the factors that influence the movements of international stocks — currency markets, European macroeconomics, and global unrest — affect the prices of his U.S. based holdings as well.

source: https://www.wallstreetphysician.com/int ... llocation/
finally, and most importantly:
The following annualized performance figures, from Morningstar, tell an interesting story. All are for the 15 years ended May 2. (Note that the closest cousin to Buffett’s investment style in this list is the U.S. large-cap value index.)

Berkshire Hathaway 6.4%
Standard & Poor’s 500 Index 4.2%
U.S. large-cap value index 7.4%
U.S. small-cap value index 12.2%
International large-cap value index 7.1%
International small-cap value index 11.5%
Emerging markets value index 11.5%

The average of these five value indexes over this 15-year period is 9.9%. For investors who are spooked by international stocks, the average of the two U.S. value indexes is 9.8%.

source: https://paulmerriman.com/beat-warren-bu ... -own-game/
3. last 5 years? Why look at the last 5 years? Why not look at the last 100 years (or whatever entire data set is available when international first started being tracked)? You can use whatever data you want to make a point. I can say you were a sucker for not investing in international in 2017 when it outperformed the U.S. by 6.68%! But I think looking at a 1 year return is just as dubious as a 5 year or 10 year and yes, even a 20 year return. Why? See #3 below...

4. what do you mean you wont' be investing for another 30-40 years. If you're 70, you could very well have investments until you're 100 (which is 30 years). Sure you're decumulating, but even VG target date retirement income fund contains 30% in stocks (of which 40% is international) from 70 to death.

I started investing in my 20s. I plan to have investments, god willing, until I'm 100. That's 80 years. Granted I didn't learn about international until my 30s but that's still a good 60-70 years to find out how international will do over the long run. My understanding is it did about as well as U.S. since it started being tracked (maybe a little under U.S., but not a significant difference). I assume over the long run this will hold. But we like to look at the recent past, unfortunately and extrapolate, to our own peril.

You're free to sell your international investments (which are cheaper than U.S.) and use the proceeds to buy U.S. (thereby selling low and buying high). You know how that ends.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Know when to hold them and when to fold them......

Post by Dead Man Walking » Tue Oct 01, 2019 6:59 pm

Many years ago, I bought Vanguard Global Equity Fund because it nearly matched the world equity allocation. My reasoning was to see how a Sharpe-like portfolio would perform. When Vanguard introduced Total World Stock Index Fund, I thought that I would eventually sell Global Equity and buy the index fund. I didn’t buy the index fund at inception because it had a purchase fee. (Vanguard deposits the purchase fee in the fund; therefore, the fee isn’t technically a load; however, I consider any fee that I have to pay to be a “load.”) Global Equity Fund has performed slightly better than the World Index Fund over the last decade; consequently, I have not made the transition. My US equity funds have outperformed Global Equity Fund and my international equity funds. My portfolio has a domestic tilt because I’ve witnessed the performance of a fund that closely replicates a world allocation.

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Re: Know when to hold them and when to fold them......

Post by Lee_WSP » Tue Oct 01, 2019 6:59 pm

If time in the market trumps all, then whether you go international or not or whether you are in international every other month, in theory should not make a huge difference in outcome. I think the trouble we run into is the benchmarks we use. The benchmarks themselves is just how a different sort of asset allocation did over a small fraction of time.

Just my thoughts on the subject. I'm sure I'm not taking everything into consideration.

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Re: Know when to hold them and when to fold them......

Post by EddyB » Tue Oct 01, 2019 7:10 pm

Never count your money while you're sitting at the table.

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Re: Know when to hold them and when to fold them......

Post by andrew99999 » Tue Oct 01, 2019 7:26 pm

marcopolo wrote:
Tue Oct 01, 2019 5:12 pm
My observation has been that all the experts that tell you to "stay the course", "be patient", etc. have all changed course from time to time. They attribute it (after the fact), to having learned "new information". Since there is ALWAYS new information becoming available, it is not at all clear to me how one decides when to "stay the course" in face of all the new information, versus when to make adjustments to your plans. If you figure it out, please do let us know.
How much of this new information is recency bias and confirmation bias.
As for "experts", look up authority bias. This is a good example.
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rascott
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Re: Know when to hold them and when to fold them......

Post by rascott » Tue Oct 01, 2019 7:36 pm

I was looking at the Stoxx 600 (Europe)..... and it is sitting lower than it was 20 years ago.... yeah you got the dividends since then, but that's basically it.... it's amazing how poor European equities have performed over the last 2 decades.

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Re: Know when to hold them and when to fold them......

Post by Fallible » Tue Oct 01, 2019 7:38 pm

By "stay the course," Jack Bogle primarily referred to avoiding the "patterns" of the short-term market, "patterns" the human brain is wired to see even when they aren't there. He meant a long-term course that is right for the individual investor, and one that would reflect changing life circumstances.

So “stay the course” means staying the right course, meaning if a chosen course is proving to be the wrong one for the individual investor, such as taking on too much or too little risk, it can and should be changed. Rick Ferri’s book, All About Asset Allocation, 2nd ed., includes a chapter, “When to Change Your Asset Allocation,” with the change taking two forms: the first is based on changing needs and the second is the result of an assessment mistake.

As for knowing when to hold or fold, if a well written IPS shows why an investor chose a certain course, it might now be determined where that choice went wrong.
John Bogle on his early road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

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Re: Know when to hold them and when to fold them......

Post by simplesimon » Tue Oct 01, 2019 7:39 pm

livesoft wrote:
Tue Oct 01, 2019 5:40 pm
I think there will come a time when foreign stocks will be good to have, so keep your eyes open.
Usually by then potential investors miss much of the gain.

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Re: Know when to hold them and when to fold them......

Post by livesoft » Tue Oct 01, 2019 7:51 pm

simplesimon wrote:
Tue Oct 01, 2019 7:39 pm
livesoft wrote:
Tue Oct 01, 2019 5:40 pm
I think there will come a time when foreign stocks will be good to have, so keep your eyes open.
Usually by then potential investors miss much of the gain.
No worries, I still have 40% of equities in international funds, down from my previous 50%.
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Re: Know when to hold them and when to fold them......

Post by randomguy » Tue Oct 01, 2019 8:24 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.
What did you do in 2008 when US had underperformed international by ~10% over the previous 5 years? Did you abandon the US stock market given the all the money it lost you and go 100% international? How did that choice work out?:) Why do you think this time is different? Throughout history international and US have alternated periods of outperformance. At the end of every cycle everyone asks why invest in the other. Why do you think this time will be any different?

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Re: Know when to hold them and when to fold them......

Post by SevenBridgesRoad » Tue Oct 01, 2019 8:35 pm

One more international thread - yes? no? - ought to clear this up once and for all.
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Re: Know when to hold them and when to fold them......

Post by hudson » Tue Oct 01, 2019 8:38 pm

When I owned stocks, I owned no funds with international in the name.
If I ever own stock funds again, I will stick with US funds.

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Re: Know when to hold them and when to fold them......

Post by oldzey » Tue Oct 01, 2019 8:52 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm
/snip

Have you changed or rethought your international exposure lately and what did you do if anything?
Nope - still staying the course at 0% international for the past 5 years.
EddyB wrote:
Tue Oct 01, 2019 7:10 pm
Never count your money while you're sitting at the table.
There'll be time enough for countin' when the dealin's done.
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Re: Know when to hold them and when to fold them......

Post by rkhusky » Tue Oct 01, 2019 9:01 pm

If you own Total World then you don’t need to worry about setting a US/Int’l split or rebalance.

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Re: Know when to hold them and when to fold them......

Post by samsdad » Tue Oct 01, 2019 9:02 pm

Would you regret holding US only if it underperforms starting tomorrow?

“Cause ev'ry hand's a winner and ev'ry hand's a loser...”

I don’t think I would, by the way.

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Re: Know when to hold them and when to fold them......

Post by MotoTrojan » Tue Oct 01, 2019 9:22 pm

What do you know that the market doesn't? I hold 25% International and feel it is a compromise where I'll sleep well regardless of which outperforms or is currently outperforming.

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JoMoney
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Re: Know when to hold them and when to fold them......

Post by JoMoney » Tue Oct 01, 2019 9:36 pm

When I had an individual stock portfolio these sorts of issues/decisions used to drive me crazy.
Inevitably if/when I decided to get out of something as soon as I did, that's when the performance would take off... and then I would kick myself. If I did nothing with the position, it would languish... and I would kick myself.
Having all my equities now in a single market cap-weighted index fund makes it a whole lot simpler to ignore the noise.
I don't have an international allocation, I took Buffett's advice 10+ years ago now, and just use a S&P 500 index... but I'm sure there's plenty of positions, or sectors in that that have been as dismal as international... actually I know the "Energy" sector has... but I don't really pay any mind to that since it's not a separate holding, and by using cap weighting there is never any "rebalancing" or trading decisions to be made.
I can totally understand why some people choose VT (Total World fund).
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Know when to hold them and when to fold them......

Post by randomguy » Tue Oct 01, 2019 11:50 pm

samsdad wrote:
Tue Oct 01, 2019 9:02 pm
Would you regret holding US only if it underperforms starting tomorrow?

“Cause ev'ry hand's a winner and ev'ry hand's a loser...”

I don’t think I would, by the way.
Thats easy to say now. It is a lot harder to say when you have been making 7%/yr less per year for a decade, you have half the money you could have, and you are constantly reading articles about how going to market weight or even overweighting foreign companies is the reasonable thing to do. And they will all post reasonable sounding things to justify their viewpoint. Of course that is probably just about the time you should be overweighting US stocks again:)

You can go down this type of trying to pick winners forever. Why own total market? Why not just some combo of health care and tech? Every look at the 30 year performance of vanguards health care fund? Active sector investing is clearly the way to go:)

Or you can take a boglehead approach, buy the hay stack, and realize that one of your holding will underperform the other.

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Re: Know when to hold them and when to fold them......

Post by willthrill81 » Wed Oct 02, 2019 12:01 am

I've posted extensively about this topic, but I'll just say this here:

Buy and hold is simple, but it's far from easy.
“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

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grayfox
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Re: Know when to hold them and when to fold them......

Post by grayfox » Wed Oct 02, 2019 3:20 am

never mind
Last edited by grayfox on Thu Oct 03, 2019 12:41 am, edited 1 time in total.

Willmunny
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Re: Know when to hold them and when to fold them......

Post by Willmunny » Wed Oct 02, 2019 7:32 am

willthrill81 wrote:
Wed Oct 02, 2019 12:01 am
I've posted extensively about this topic, but I'll just say this here:

Buy and hold is simple, but it's far from easy.
Much like weight loss in that regard

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hariseldon74
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Re: Know when to hold them and when to fold them......

Post by hariseldon74 » Wed Oct 02, 2019 7:46 am

I'm not sure why but I have been way overweight US stocks last 10 years (maybe 95%). Partly from Bogle's comments and partly recency bias and partly choices I had. Most of my 401K plan doesn't allow good international indexing and my Roth IRA i hadn't moved to International. Since I have stayed at the same company so many years it's mostly in my 401K plan at work.

Yes I road the dollar wave in my direction, but i twas also from just having poor choices in my 401K. I wonder how many investors are like me in that sense.

I think I need to be 20% international asap.....I have too little International exposure so I'm actually concerned on the other end.

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Re: Know when to hold them and when to fold them......

Post by nisiprius » Wed Oct 02, 2019 8:10 am

(Shrug) Speaking strictly personally, I didn't like international stocks because in, let's say the time frame from 1990 (when Burton Malkiel's model portfolios in A Random Walk Down Wall Street said 16% of stocks should be international) until recently (when he now says full cap weight or about 50%), I've always had the feeling of being sold something under high pressure and it has created sales resistance in me.

I didn't want to be too far out of the mainstream, so I settled on 20%, and I remember very distinctly--I think it was around 2007--it drifted up to something like 20.4% and Vanguard's Portfolio Watch literally put up a red flag and warned me that I had a very high international allocation. That's right, at that time anything over 20% triggered a warning.

Well, as I write this it is at 21.1% international (for bad reasons I had goosed it up to 25%), and now Portfolio Watch is complaining because it is less than 30%. (To be fair, just a blue "consider," not a red "caution.")

So there you go. The same allocation Vanguard said was too high circa 2007 is now too low. As advice, I find that annoying, if not actually irresponsible. (And US cap-weight globally is now higher than it was then--and higher than it was in 1990).

All I can say is that at the moment I'm glad I dug in my heels at 20-25%, and that's a low enough allocation that I am not getting anxious or panicky about having it. Sorta-kinda staying the course, almost, in a sloppy way.
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Re: Know when to hold them and when to fold them......

Post by bloom2708 » Wed Oct 02, 2019 8:30 am

I have let my International dribble down to 5%.

Much like the 3 fund portfolio, what if you don't NEED international to have some outperformance years "up ahead"?

If we assume that International will be roaring someday soon, what is the likelyhood that US stocks are at least not doing OK?

I love reading the International or not threads. I'm closing in on 50 and hope to retire by 56-58. I might let International stay where it is or add some new money and go back up to 10%. Don't know.
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Re: Know when to hold them and when to fold them......

Post by goingup » Wed Oct 02, 2019 8:32 am

midareff-
You posted a few weeks ago that you'd exchanged nearly all international funds for US equity funds. I'm curious about why you're posting about this now.

Was it the right investing decision? Was it wise or capitulation? Who knows. For me, holding 20-25% international seems about right. It has been disappointing and I have my doubts that it will be helpful (at all) when US markets falter. :|

I will say that I think rare measured incremental changes are more in line with the "stay the course" philosophy. It's important to be self-aware and guard against impulsivity, especially as we age. (This is not to infer anything about your portfolio decision.) In general, I find incremental changes made on a time table with a written plan cause less second-guessing. :beer

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Re: Know when to hold them and when to fold them......

Post by pokebowl » Wed Oct 02, 2019 9:28 am

Still holding global weighting here with no plans to change, should the cap weightings change due to international under performance, my portfolio will automatically drift accordingly and visa versa. If the all in U.S. crowd is correct, over half of my portfolio will over perform, if we experience a multi-decade period of international out performance again, my international side will excel. Overall I will get the middle of whatever the difference is between the global markets and still hit my target. :beer

If indexing was supposed to always guarantee you on the top performing asset class, we all would be retired long ago on our own private islands. :wink:
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Re: Know when to hold them and when to fold them......

Post by rascott » Wed Oct 02, 2019 9:41 am

goingup wrote:
Wed Oct 02, 2019 8:32 am
midareff-
You posted a few weeks ago that you'd exchanged nearly all international funds for US equity funds. I'm curious about why you're posting about this now.

Was it the right investing decision? Was it wise or capitulation? Who knows. For me, holding 20-25% international seems about right. It has been disappointing and I have my doubts that it will be helpful (at all) when US markets falter. :|

I will say that I think rare measured incremental changes are more in line with the "stay the course" philosophy. It's important to be self-aware and guard against impulsivity, especially as we age. (This is not to infer anything about your portfolio decision.) In general, I find incremental changes made on a time table with a written plan cause less second-guessing. :beer

There has been zero actual evidence that intl investing has been helpful for the last 50 years. Maybe the next 50 will be different?

Personally, I believe the intl and US markets will continue to grow even more correlated. This trend started 30+ years ago.... and is not abating, but growing stronger. 2008 showed us that when the US economy gets ill.... all the rest get even more ill.

Intl returns seem nothing more than a currency play to me these days.... when the dollar is weak, they look good.... when the dollar is strong, they are terrible.

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Re: Know when to hold them and when to fold them......

Post by Vanguard Fan 1367 » Wed Oct 02, 2019 9:52 am

My investment life really changed since reading, The John Bogle Reader in 2014. As others have said Jack wasn't too excited about international. Before reading Jack I had and still do have a little in a Vanguard Global Fund. So I am happy with my mostly non-international asset allocation.

I realize that many US Companies have international connections. Jack and I are happy with that.

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Re: Know when to hold them and when to fold them......

Post by midareff » Wed Oct 02, 2019 10:03 am

goingup wrote:
Wed Oct 02, 2019 8:32 am
midareff-
You posted a few weeks ago that you'd exchanged nearly all international funds for US equity funds. I'm curious about why you're posting about this now.

Was it the right investing decision? Was it wise or capitulation? Who knows. For me, holding 20-25% international seems about right. It has been disappointing and I have my doubts that it will be helpful (at all) when US markets falter. :|

I will say that I think rare measured incremental changes are more in line with the "stay the course" philosophy. It's important to be self-aware and guard against impulsivity, especially as we age. (This is not to infer anything about your portfolio decision.) In general, I find incremental changes made on a time table with a written plan cause less second-guessing. :beer
You are correct, and I did post I had significantly sliced my once nearly equal weighted international holdings at that time. At the present time I am at whatever portion of their sales the S&P500 and Total Stock Market funds generate overseas. ... no longer holding any % of an International Fund. I did some back of the napkin math and determined that if, or as soon as, US outperforms international by 2.25% the LTCG tax cost of the change would be covered. Of course that probably means International will outperform the US for the next two decades solid, so all should thank me for having brought that to fruition :oops: .

Under-performance aside, although it certainly was a factor, perspectives change with time as does ones investing education. Going back a dozen or more years I held 19 different funds at one time. ..even held some of Larry's touted commodities for a couple of years. 8 funds now comprised of Roth 2, taxable 2, IRA 4. My lovely wife freezes at a page full of numbers while to me it's just simple math. She is a good bit younger and much healthier so the reality of aging will poop on my doorstep sooner or later and the more things that happen automatically to fewer items the better. Perhaps my next research project will be slicing a fund or two from the IRA.... at the end of the day it's all stocks and bonds and your measure of risk anyway.

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goingup
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Re: Know when to hold them and when to fold them......

Post by goingup » Wed Oct 02, 2019 10:20 am

midareff wrote:
Wed Oct 02, 2019 10:03 am
goingup wrote:
Wed Oct 02, 2019 8:32 am
midareff-
You posted a few weeks ago that you'd exchanged nearly all international funds for US equity funds. I'm curious about why you're posting about this now.

Was it the right investing decision? Was it wise or capitulation? Who knows. For me, holding 20-25% international seems about right. It has been disappointing and I have my doubts that it will be helpful (at all) when US markets falter. :|

I will say that I think rare measured incremental changes are more in line with the "stay the course" philosophy. It's important to be self-aware and guard against impulsivity, especially as we age. (This is not to infer anything about your portfolio decision.) In general, I find incremental changes made on a time table with a written plan cause less second-guessing. :beer
You are correct, and I did post I had significantly sliced my once nearly equal weighted international holdings at that time. At the present time I am at whatever portion of their sales the S&P500 and Total Stock Market funds generate overseas. ... no longer holding any % of an International Fund. I did some back of the napkin math and determined that if, or as soon as, US outperforms international by 2.25% the LTCG tax cost of the change would be covered. Of course that probably means International will outperform the US for the next two decades solid, so all should thank me for having brought that to fruition :oops: .

Under-performance aside, although it certainly was a factor, perspectives change with time as does ones investing education. Going back a dozen or more years I held 19 different funds at one time. ..even held some of Larry's touted commodities for a couple of years. 8 funds now comprised of Roth 2, taxable 2, IRA 4. My lovely wife freezes at a page full of numbers while to me it's just simple math. She is a good bit younger and much healthier so the reality of aging will poop on my doorstep sooner or later and the more things that happen automatically to fewer items the better. Perhaps my next research project will be slicing a fund or two from the IRA.... at the end of the day it's all stocks and bonds and your measure of risk anyway.
I agree that the stock/bond ratio is much more important than type of equity held. Sounds like it was a well-thought out decision for you. Simpler is usually better when it comes to portfolio management.

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Re: Know when to hold them and when to fold them......

Post by Mountain Doc » Wed Oct 02, 2019 10:51 am

midareff wrote:
Tue Oct 01, 2019 4:53 pm
Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%

Have you changed or rethought your international exposure lately and what did you do if anything?

(edited for brevity)
If the numbers were reversed, would you consider "folding" your position in US stocks?

Because at some point the 5-year numbers will be reversed. When that occurs, many US-only investors will rationalize a new position in international stocks for "diversification" or some other reason that sounds much more sophisticated than performance chasing. In reality, it will just be classic performance chasing that causes investors to buy-high / sell-low.

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Re: Know when to hold them and when to fold them......

Post by midareff » Wed Oct 02, 2019 12:23 pm

Mountain Doc wrote:
Wed Oct 02, 2019 10:51 am
midareff wrote:
Tue Oct 01, 2019 4:53 pm
Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%

Have you changed or rethought your international exposure lately and what did you do if anything?

(edited for brevity)
If the numbers were reversed, would you consider "folding" your position in US stocks?

Because at some point the 5-year numbers will be reversed. When that occurs, many US-only investors will rationalize a new position in international stocks for "diversification" or some other reason that sounds much more sophisticated than performance chasing. In reality, it will just be classic performance chasing that causes investors to buy-high / sell-low.
I'm simply going to quote rascott as a reply... and I don't have another 50 to find out.

"There has been zero actual evidence that intl investing has been helpful for the last 50 years. Maybe the next 50 will be different?

Personally, I believe the intl and US markets will continue to grow even more correlated. This trend started 30+ years ago.... and is not abating, but growing stronger. 2008 showed us that when the US economy gets ill.... all the rest get even more ill.

Intl returns seem nothing more than a currency play to me these days.... when the dollar is weak, they look good.... when the dollar is strong, they are terrible."

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Re: Know when to hold them and when to fold them......

Post by Mountain Doc » Wed Oct 02, 2019 1:22 pm

midareff wrote:
Wed Oct 02, 2019 12:23 pm
Mountain Doc wrote:
Wed Oct 02, 2019 10:51 am
midareff wrote:
Tue Oct 01, 2019 4:53 pm
Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%

Have you changed or rethought your international exposure lately and what did you do if anything?

(edited for brevity)
If the numbers were reversed, would you consider "folding" your position in US stocks?

Because at some point the 5-year numbers will be reversed. When that occurs, many US-only investors will rationalize a new position in international stocks for "diversification" or some other reason that sounds much more sophisticated than performance chasing. In reality, it will just be classic performance chasing that causes investors to buy-high / sell-low.
I'm simply going to quote rascott as a reply... and I don't have another 50 to find out.

"There has been zero actual evidence that intl investing has been helpful for the last 50 years. Maybe the next 50 will be different?

Personally, I believe the intl and US markets will continue to grow even more correlated. This trend started 30+ years ago.... and is not abating, but growing stronger. 2008 showed us that when the US economy gets ill.... all the rest get even more ill.

Intl returns seem nothing more than a currency play to me these days.... when the dollar is weak, they look good.... when the dollar is strong, they are terrible."
A decade ago, the quote would have been "there has been zero actual evidence that US investing has been helpful for the last 40 years."

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Re: Know when to hold them and when to fold them......

Post by Tyler Aspect » Wed Oct 02, 2019 1:36 pm

I am quite comfortable with international stock being 20% of my stock allocation (Bogle recommendation). I could increase that allocation to 25% through dividend reinvestment.
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Re: Know when to hold them and when to fold them......

Post by deikel » Wed Oct 02, 2019 3:47 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm
A discussion among many on the concept of developing your plan and holding it regardless of how future results come in. Let's use Total International as an example for this discussion. You read books, ... Bernstein, Ferri, Bogle, Swedroe and so forth. You read threads on this forum which would lead you to develop the concept you want to hold 40% of your equities as international. You read stay the course hundreds if not thousands of times.

You sit, you watch, you rebalance into and into and into as it systematically under performs over a long term. All the while Bogle's no more than 20% if you must and Buffet's none keep going through your head.

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.

Let's further suppose you got old..... >70 .... and your holding period is never going to be another 30 or 40 years...... and you have traveled Europe and seen changes since you traveled there 4 years ago.

Like Jack and Warren I believe in the capitalistic model we presently have.

Have you changed or rethought your international exposure lately and what did you do if anything?
So what is your problem ?

Combined, you have gained roughly 7 % over the last 5 years which is (almost) exactly what you should get from the stock market on average...on an inflation rate of less then 2% no less.

You picked an asset allocation and it worked for you exactly as intended (no bonds though at 70 ?)

Now envy sets in and you have FOMO and you plan to time the market ? Guess what will likely happen when you do that ? You might loose out and big enough to risk the overall plan, where your plan actually works.

....of course, you could also cash everything in and call it a win (plan also worked !), divide the money by the years remaining and be done with it.

If you don't like 'stay the course' because the course looks boring, maybe 'slow is steady, steady is smooth and smooth is fast' will help ?
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Re: Know when to hold them and when to fold them......

Post by midareff » Wed Oct 02, 2019 4:02 pm

deikel wrote:
Wed Oct 02, 2019 3:47 pm
midareff wrote:
Tue Oct 01, 2019 4:53 pm
A discussion among many on the concept of developing your plan and holding it regardless of how future results come in. Let's use Total International as an example for this discussion. You read books, ... Bernstein, Ferri, Bogle, Swedroe and so forth. You read threads on this forum which would lead you to develop the concept you want to hold 40% of your equities as international. You read stay the course hundreds if not thousands of times.

You sit, you watch, you rebalance into and into and into as it systematically under performs over a long term. All the while Bogle's no more than 20% if you must and Buffet's none keep going through your head.

Let's suppose, just suppose... your 40% or equities is near $400K and you look at M* (Morningstar) and see the last 5 years performance of Total International is 3.16% averaged as of yesterday, and Total US is 10.42%. Your commitment to staying the course has cost you more than $150K in capital gains not to mention the additional tax burden of taxable dividend distributions.

Let's further suppose you got old..... >70 .... and your holding period is never going to be another 30 or 40 years...... and you have traveled Europe and seen changes since you traveled there 4 years ago.

Like Jack and Warren I believe in the capitalistic model we presently have.

Have you changed or rethought your international exposure lately and what did you do if anything?
So what is your problem ? I don't have one.

Combined, you have gained roughly 7 % over the last 5 years which is (almost) exactly what you should get from the stock market on average...on an inflation rate of less then 2% no less. That's a difference of 7% per year in returns That 7% annual difference makes an end difference of greater than $160K.

You picked an asset allocation and it worked for you exactly as intended (no bonds though at 70 ?) Never mentioned bonds, the thread talks about international and domestic equity.

Now envy sets in and you have FOMO and you plan to time the market ? Guess what will likely happen when you do that ? You might loose out and big enough to risk the overall plan, where your plan actually works.

Suppositions from thin air deikel.

....of course, you could also cash everything in and call it a win (plan also worked !), divide the money by the years remaining and be done with it.

Is that really your suggestion?

If you don't like 'stay the course' because the course looks boring, maybe 'slow is steady, steady is smooth and smooth is fast' will help ?

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Re: Know when to hold them and when to fold them......

Post by simas » Wed Oct 02, 2019 4:13 pm

midareff wrote:
Tue Oct 01, 2019 4:53 pm

Have you changed or rethought your international exposure lately and what did you do if anything?
I have significantly increased it based on review of IPS and portfolio. Specifically I was very uncomfortable how much my 'reptile brain' was starting to release dopamine whenever S&P500 would hit next high, easy 100k, easy 300k, 500K in 1/2 year - since I know that what came up would also come down.

As such few weeks ago I worked through what I want to have (40% international (1/2 developed and half developing), 40% US, 20% bond index) and rebalanced to that. Now as cash accumulates over time, I would invest per normal rebalance...

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