Does International investment still make sense?

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columbia
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Re: Does International investment still make sense?

Post by columbia » Thu Feb 13, 2020 10:33 pm

abuss368 wrote:
Thu Feb 13, 2020 10:30 pm
columbia wrote:
Thu Feb 13, 2020 10:27 pm
as9 wrote:
Thu Feb 13, 2020 10:22 pm
abuss368 wrote:
Thu Feb 13, 2020 10:17 pm
In reviewing the YTD fund performance between Total Stock and Total International Stock on Vanguard's website, there appears to be an almost 5% difference:

Total Stock - 4.68%
Total International Stock - (0.23%)
YTD is 44 days so how significant is that?
Not at all. For those banking on it, I hope those expected returns finally kick in.
Columbia -

Have you ever invested internationally or specifically with Vanguard Total International Stock Index?
Historically, most of my ex US was through the Star fund; no more for me.
If you leave your head in the sand for too long, you might get run over by a Jeep.

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abuss368
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Re: Does International investment still make sense?

Post by abuss368 » Thu Feb 13, 2020 10:45 pm

columbia wrote:
Thu Feb 13, 2020 10:33 pm
abuss368 wrote:
Thu Feb 13, 2020 10:30 pm

Columbia -

Have you ever invested internationally or specifically with Vanguard Total International Stock Index?
Historically, most of my ex US was through the Star fund; no more for me.
Hi Columbia -

Part of my strategy and motivation for dropping all international funds after over a decade was I came to realize I don't need the optimal or best strategy (which is not known in advance by anyone). Total Stock just needs to be "good enough" which will get us to our goals (based on asset allocation). I know for certain that Total Stock will never be below average.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

Northern Flicker
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Re: Does International investment still make sense?

Post by Northern Flicker » Thu Feb 13, 2020 11:36 pm

patrick wrote:
Thu Feb 13, 2020 8:55 pm
visualguy wrote:
Thu Feb 13, 2020 8:00 pm
patrick wrote:
Thu Feb 13, 2020 6:54 pm
rascott wrote:
Tue Feb 11, 2020 12:05 am
Some would discount a century of outperformance as statistical noise. Others don't.
Indeed. Some people discount the huge outperformance of Australian stocks since 1900 and keep investing in the historically under-performing US stocks.
False equivalence again. Australia is a tiny market when compared the the US. Also, it's the only country that out-performed the US over that period, and it did so by something like half a percent. Sorry, ex-US indexing truly hasn't been a good approach in the long run. If the US didn't exist, and all I could get is what ex-US delivered, I would be all in real-estate, and stay out of the stock market. Too little return for the volatility in ex-US - below my threshold for a reasonable investment.
Australia isn't the only country that outperformed the US since 1900. South Africa did even better. I suppose you'll dismiss that as another tiny market, but how large does a market have to be for its historical performance to count? Note that back in 1900 the UK had a larger market than the US, as did Japan briefly around 1990.
From 1900-1917 Russian equities were the top performing equity market worldwide. I’m sure any aristocratic Russian families who were biased to their home country’s equities wished they weren’t. (I doubt non-aristocrats owned equities in 1900.)
Index fund investor since 1987.

visualguy
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Re: Does International investment still make sense?

Post by visualguy » Thu Feb 13, 2020 11:39 pm

patrick wrote:
Thu Feb 13, 2020 8:55 pm
visualguy wrote:
Thu Feb 13, 2020 8:00 pm
patrick wrote:
Thu Feb 13, 2020 6:54 pm
rascott wrote:
Tue Feb 11, 2020 12:05 am
Some would discount a century of outperformance as statistical noise. Others don't.
Indeed. Some people discount the huge outperformance of Australian stocks since 1900 and keep investing in the historically under-performing US stocks.
False equivalence again. Australia is a tiny market when compared the the US. Also, it's the only country that out-performed the US over that period, and it did so by something like half a percent. Sorry, ex-US indexing truly hasn't been a good approach in the long run. If the US didn't exist, and all I could get is what ex-US delivered, I would be all in real-estate, and stay out of the stock market. Too little return for the volatility in ex-US - below my threshold for a reasonable investment.
Australia isn't the only country that outperformed the US since 1900. South Africa did even better. I suppose you'll dismiss that as another tiny market, but how large does a market have to be for its historical performance to count? Note that back in 1900 the UK had a larger market than the US, as did Japan briefly around 1990.
South Africa under-performed the US in USD. It only beat it in local currency, and, yes, it is another tiny market.

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Re: Does International investment still make sense?

Post by KyleAAA » Fri Feb 14, 2020 1:27 am

UpsetRaptor wrote:
Thu Feb 13, 2020 4:02 pm
KyleAAA wrote:
Thu Feb 13, 2020 3:08 pm
UpsetRaptor wrote:
Thu Feb 13, 2020 2:28 pm
KyleAAA wrote:
Wed Feb 12, 2020 3:48 pm
rascott wrote:
Tue Feb 11, 2020 12:05 am
Some would discount a century of outperformance as statistical noise. Others don't.
The US was an outlier in the 20th century. Do we expect it to be an outlier in the 21st? That idea strains credibility. I don't see any utility in looking at the world as it was over a century ago. We've had 2 world wars and an influenza pandemic since then.
In addition to the 20th century, it also outperformed in the 19th century (200 years ago it was not even a top 10 economy). It has also outperformed thus far in the 21st century, albeit "only" two decades. Entirely unforeseeable, black swan type of stuff, nothing systemic/fundamental?
Obviously there were systemic/fundamental drivers in the 20th century and before. That's literally what I said above. Those drivers have not been present since the early 80s.

But you couldn't have predicted that outperformance 100-200 years ago. It only seems obviously in retrospect. Just because there were fundamental drivers doesn't mean it was predictable.
I would classify things like world wars as black swan events, that's not what I was implying by systemic/fundamental reasons for US outperformance. Regardless of semantic quibbles, let's say you're correct and the "fundamental" reasons for centuries of historical US outperformance ceased to exist in the early 1980s. Why has the US continued to outperform for almost 4 decades since?
That’s also not what I was implying by systemic/fundamental reasons for US outperformance, so I don’t think there are any semantics to quibble about. If I buy your argument that the US has outperformed, which it certainly hasn’t in the sense that it hasn’t been the top or nearly top performing economy, I would say it’s likely due to the after effects of those fundamental factors. If you start on 3rd base, it’s easy to look like a superstar for a while even if you’ve got bad knees. I’ve never seen a sound justification for why anybody should expect the next 80 years to look like the last 80 years. Do you have one?

bck63
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Re: Does International investment still make sense?

Post by bck63 » Fri Feb 14, 2020 6:43 am

Maybe developed markets, but I don't think it's really necessary.

But I'm not giving my money to stock markets controlled by authoritarian dictatorships like China.

Or those wacky emerging market countries with despots and murderers at the helm? I'll pass.

lostdog
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Re: Does International investment still make sense?

Post by lostdog » Fri Feb 14, 2020 11:32 am

jibantik wrote:
Thu Feb 13, 2020 8:12 pm
abuss368 wrote:
Thu Feb 13, 2020 7:58 pm
jibantik wrote:
Thu Feb 13, 2020 7:24 pm
abuss368 wrote:
Tue Feb 11, 2020 10:25 am
rockstar wrote:
Tue Feb 11, 2020 10:08 am
It’s a lot of risk for lower returns than domestic. That’s what I’m seeing. I haven’t sold my position yet. But I’m struggling with a rational reason to hold it.
That is exactly a point I have often raised which appears to fall on deaf ears. I have zero, none, nada, interest in investing in something that is acknowledged to be much riskier for the same expected return as U.S.

For the additional risk, I expect additional expected return! That never seems to happen.
It should fall on deaf ears. Investing based on past performance is one of the worst things you can do.
So when does the additional return arrive? Jack Bogle noted a few years ago (which means the gap is even wider now) since 1994 the cumulative return of international is approximately 280% while US is over 700%! Can't imagine what that would be today.
No idea, which is why I invest in the total market. I don't performance chase, I am not trying to beat the market because it's a fools errand. If you are trying to outperform the market based on past performance, then I have some snake oil to sell you.

Here is a good set of quotes about past performance.

One of my personal favorites: Bill Schultheis, adviser and author of The Coffeehouse Investor:
Using past performance numbers as a method for choosing mutual funds is such a lousy idea that mutual fund companies are required by law to tell you it is a lousy idea.
But Jack and Warren said so! That trumps everything rational about long term investing.
Taxable: VLCAX and VFWAX || Tax Deferred: VTWAX

lostdog
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Re: Does International investment still make sense?

Post by lostdog » Fri Feb 14, 2020 11:34 am

bck63 wrote:
Fri Feb 14, 2020 6:43 am
Maybe developed markets, but I don't think it's really necessary.

But I'm not giving my money to stock markets controlled by authoritarian dictatorships like China.

Or those wacky emerging market countries with despots and murderers at the helm? I'll pass.
The "countries outside the US are corrupt wastelands" argument has no merit. I'm assuming this comes from the overly patriotic crowd.
Taxable: VLCAX and VFWAX || Tax Deferred: VTWAX

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Stef
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Re: Does International investment still make sense?

Post by Stef » Fri Feb 14, 2020 12:36 pm

bck63 wrote:
Fri Feb 14, 2020 6:43 am
Maybe developed markets, but I don't think it's really necessary.

But I'm not giving my money to stock markets controlled by authoritarian dictatorships like China.

Or those wacky emerging market countries with despots and murderers at the helm? I'll pass.
Europe has no future apart from non-EU countries. Makes EM much more interesting.

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rockstar
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Re: Does International investment still make sense?

Post by rockstar » Fri Feb 14, 2020 12:42 pm

Stef wrote:
Fri Feb 14, 2020 12:36 pm
bck63 wrote:
Fri Feb 14, 2020 6:43 am
Maybe developed markets, but I don't think it's really necessary.

But I'm not giving my money to stock markets controlled by authoritarian dictatorships like China.

Or those wacky emerging market countries with despots and murderers at the helm? I'll pass.
Europe has no future apart from non-EU countries. Makes EM much more interesting.
I agree with this.

Northern Flicker
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Re: Does International investment still make sense?

Post by Northern Flicker » Fri Feb 14, 2020 2:33 pm

lostdog wrote:
Fri Feb 14, 2020 11:34 am
bck63 wrote:
Fri Feb 14, 2020 6:43 am
Maybe developed markets, but I don't think it's really necessary.

But I'm not giving my money to stock markets controlled by authoritarian dictatorships like China.

Or those wacky emerging market countries with despots and murderers at the helm? I'll pass.
The "countries outside the US are corrupt wastelands" argument has no merit. I'm assuming this comes from the overly patriotic crowd.
Presently, based on Transparency International rankings (which are by no means the final word on the matter), it is possible that corruption risk may be decreased by diversifying US equities with developed markets non-US equities:

https://files.transparency.org/content/ ... ort_EN.pdf

Even if shareholder protections were similar across major DM economies, diversification likely would at least somewhat reduce the risk of a blowup driven by a major corruption scandal.
Index fund investor since 1987.

wesgreen
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Re: Does International investment still make sense?

Post by wesgreen » Fri Feb 14, 2020 2:42 pm

[ quoted post removed by admin LadyGeek]

+1

Stef, I believe shareholder protections and oversight are stronger in some European countries than in the US, and literacy, educational achievement and life expectancy higher. I don't invest there currently, but I wouldn't write the EU off long term.

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Re: Does International investment still make sense?

Post by LadyGeek » Fri Feb 14, 2020 3:16 pm

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