Vanguard: the case for global equity investing

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pepys
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Re: Vanguard: the case for global equity investing

Post by pepys » Wed Oct 16, 2019 4:17 pm

goodenyou wrote:
Wed Oct 16, 2019 3:24 pm
JBeck wrote:
Wed Oct 16, 2019 12:42 pm
vineviz wrote:
Tue Oct 15, 2019 6:18 pm
Elysium wrote:
Tue Oct 15, 2019 4:30 pm
[Comment removed -- mod oldcomputerguy]

Take a look at the following standings for the United States and tell me whether you think it is overwhelming evidence of anything other than a lack of exceptional economic standing.

• 24th best education system
• 25th fastest GDP growth
• 22nd least corrupt economic system
• 28th greatest life expectancy at birth
• 12th highest economic freedom
• 4th highest GDP per capita
To top it off the U.S. was ranked 18th on the 2018 World Happiness Report :(

And #1 (Numero Uno) for immigration by a LONG shot.
By what measure?

If you look at "List of countries by net migration rate" on Wikipedia (so immigration rate), the US is behind dozens of countries (Switzerland, UK, Germany, New Zealand, Canada, etc.).

If you look at "List of sovereign states and dependent territories by immigrant population" (so number of immigrants actually in the country), on a per capita basis the US is again behind dozens of countries (Switzerland, Germany, Canada, Sweden, Australia, etc.).

If you don't compare per capita, it's not a fair comparison. Of course the US is going to have more immigrants than a country with a fifth of the population, so you immediately cut the comparison group to about 20, most of which are not developed, and all but two still with a lower population.

So the US isn't even near the top on this one either.

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midareff
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Re: Vanguard: the case for global equity investing

Post by midareff » Wed Oct 16, 2019 4:58 pm

Uncorrelated wrote:
Wed Oct 16, 2019 3:57 pm
midareff wrote:
Wed Oct 16, 2019 3:37 pm
Uncorrelated wrote:
Wed Oct 16, 2019 3:32 pm
midareff wrote:
Wed Oct 16, 2019 2:12 pm
and the fewer years until termination of decumulation the less effect it has, which is why many recommend a steadily increasing equity allocation through retirement. That's what I said, self mitigating.
See An Introduction to Computational Finance Without Agonizing Pain, theory 1 on page 119. A mathematical proof that glidepaths don't work.
and that may very well be true. I'm not trying to defend the rising equity allocation glide path, the authors of it cam handle their own work. My point is that the sequence or return risk is more impactful at initial retirement than it may be 10, 15 or 25 years after retirement.


Which study are you referring to? I know of two studies that claim that glidepaths "work". One of them wrongfully claims they found the optimal glidepath due to numerical instability in their simulation. The other contains serious statistical errors.

A glidepath is not the right way to prevent sequence of returns risk.
Never said it was... my point was that the further you get it to retirement the less the sequence of returns risk presents a hazard for you. ie: self mitigating over time.

columbia
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Re: Vanguard: the case for global equity investing

Post by columbia » Wed Oct 16, 2019 5:13 pm

Broken Man 1999 wrote:
Wed Oct 16, 2019 3:29 pm
Perhaps Vanguard's new active International Core fund will deliver better returns.

Might be just the ticket.

Broken Man 1999
Wellington Management deserves a potential optimism, for sure.

tibbitts
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Re: Vanguard: the case for global equity investing

Post by tibbitts » Wed Oct 16, 2019 5:28 pm

columbia wrote:
Wed Oct 16, 2019 5:13 pm
Broken Man 1999 wrote:
Wed Oct 16, 2019 3:29 pm
Perhaps Vanguard's new active International Core fund will deliver better returns.

Might be just the ticket.

Broken Man 1999
Wellington Management deserves a potential optimism, for sure.
Well, it would be helpful if we knew how they're doing with, for example, their chunk of International Explorer. Do we have any idea of Wellington's performance in international markets? It seems like where they have the ability to invest in them, they haven't chosen to invest anywhere near a market weight, which doesn't seem to indicate a lot of enthusiasm.

lazyday
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Re: Vanguard: the case for global equity investing

Post by lazyday » Thu Nov 07, 2019 10:53 am

lazyday wrote:
Mon Oct 14, 2019 8:29 am
johnnyQA wrote:
Mon Oct 14, 2019 12:04 am
https://www.fortunefinancialadvisors.co ... aluations/
[snip by lazyday] analysis reveals that much of valuation disparities can be explained by differences in sector or industry composition
Different opinion in a paper linked in the top post here: viewtopic.php?t=231996

The GMO analysis doesn't use subsectors as I recall, but otherwise uses more sophisticated valuation measures.

And welcome to the forum :)
johnnyQA, if you're still here:

An FT blog has a guest post by the same author, this time comparing US and EM valuations. I’m still not convinced.

https://ftalphaville.ft.com/2019/11/05/ ... aluations/
To start, let’s break down the EM index into various sectors. On this basis, EM often trades on a par with, and in some cases even at a premium to, its US counterparts.
“Often” is a stretch. I’d say it’s on par never, and more expensive in 3/10 sectors. Just because EM in some sectors looks more expensive doesn’t detract from EM being cheaper overall.

The author then looks at subsectors, which might have potential. It would be nice if the author for example reweighted the EM index so that each subsector had the same weight as in the US, and then compared valuations of the reweighted index to the US. Instead, the data shown is a bit of a mess and you can form whatever conclusions you like.

Later in the article:
…. MSCI’s EM Value index, where financial, energy, and materials stocks currently combine to make up just under 60 per cent of the index
The table above this quote shows that financials, energy, and materials are all much cheaper in EM than they are in the US. Which could point towards EM value being much cheaper than US value.

johnnyQA
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Re: Vanguard: the case for global equity investing

Post by johnnyQA » Thu Nov 07, 2019 2:21 pm

Hi.

This author seems to think the problem with EM may not be with their markets, but with the index itself.

https://www.marketwatch.com/story/heres ... 2019-07-11


I'm avoiding EM for various reasons. One being that climate change models look particularly devastating for many EM countries.

international001
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Re: Vanguard: the case for global equity investing

Post by international001 » Thu Nov 07, 2019 4:00 pm

Uncorrelated wrote:
Wed Oct 16, 2019 3:32 pm
midareff wrote:
Wed Oct 16, 2019 2:12 pm
and the fewer years until termination of decumulation the less effect it has, which is why many recommend a steadily increasing equity allocation through retirement. That's what I said, self mitigating.
See An Introduction to Computational Finance Without Agonizing Pain, theory 1 on page 119. A mathematical proof that glidepaths don't work.
I wouldn't want to pass on this theorem. It's what I always suspected. Glide paths are overstimated. You can use something AA in the middle for the longer time of the accumulation phase. And the theorem shows that it's even better (lower stdev for the same return)

What the theorem doesn't consider is a DAC (add contributions every year, like most people do). Only in this case the glide path would make sense. Because the dollars contributed during the last years you don't want to invest them in risky assets. It could be generalized for increasing stock allocation during distribution phase afte retirement (increase glide path).

lazyday
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Re: Vanguard: the case for global equity investing

Post by lazyday » Thu Nov 07, 2019 4:16 pm

From the paper linked in the article:
Our approach is based on the idea that publicly traded securities can be be
used to gain proxy exposure to non-traded assets. Applying this idea, we show that diversifying into emerging economies by investing solely in publicly-traded export-oriented firms in
developed markets provides benefits beyond those available through emerging market equity
indices.
Our emerging economy portfolios generate Sharpe ratios exceeding those of equity indices
of developed markets or of portfolios based on emerging market equities.
Sounds too good to be true, getting the benefit without taking the risk. But it’s a long paper and I just skimmed the conclusions.

columbia
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Re: Vanguard: the case for global equity investing

Post by columbia » Thu Nov 07, 2019 4:37 pm

johnnyQA wrote:
Thu Nov 07, 2019 2:21 pm
Hi.

This author seems to think the problem with EM may not be with their markets, but with the index itself.

https://www.marketwatch.com/story/heres ... 2019-07-11


I'm avoiding EM for various reasons. One being that climate change models look particularly devastating for many EM countries.
Very interesting! possible ETF?

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oldcomputerguy
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Re: Vanguard: the case for global equity investing

Post by oldcomputerguy » Fri Nov 08, 2019 7:09 am

Some off-topic comments were removed. Please keep the discussion focused on the OP's original topic (the case for global equity investing).
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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fortyofforty
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Re: Vanguard: the case for global equity investing

Post by fortyofforty » Fri Nov 08, 2019 4:56 pm

johnnyQA wrote:
Thu Nov 07, 2019 2:21 pm
Hi.

This author seems to think the problem with EM may not be with their markets, but with the index itself.

https://www.marketwatch.com/story/heres ... 2019-07-11


I'm avoiding EM for various reasons. One being that climate change models look particularly devastating for many EM countries.
Such "risks", whether real or imaginary, should be priced into those markets.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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