International (Non-US) versus US Equities (The "Arguments")

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ksualum
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by ksualum »

unwitting_gulag wrote: Mon Jan 27, 2025 11:27 am
Legitimate-Engine wrote: Mon Jan 27, 2025 6:43 am

I really want to understand this. Everyone is aware of the US's performance. So, why aren't they all flocking to US even more? If the US is such a sure bet, it should be close to 100% of the global stock market.
Lots of candidate reasons:

1. Home country bias. A British investor would be biased towards British stocks... with truly devastating results in the 21st century so far.
2. Listening to "professional" commentary. For nearly a decade, we've been hearing how the US is overvalued and ex-US offers better prospects.
3. Consequences of EMH. Presumably investors worldwide have read Malkiel, Fama and the like. They're attracted to global market-cap.
4. Contrarian sentiments. If "everyone" is aware of something, and acting accordingly, then a contrarian would seek the opposite.
5. Insurance. People worldwide want to hedge their bets, so even if they believe that 100% is best for max-profits, they diversify to ex-US.
6. Inertia. It takes a long time for ideas to diffuse as actions.

I also wanted to comment on an earlier post about diversification, where the person in question owns their residence in the US, and has rental property in the US, and is thinking about diversification via ex-US stocks, and presumably also has a good W2 salary in the US. In that case, yes, the case for ex-US feels more compelling. But for a person who owns zero real estate, has a crummy salary or is retired, and has a large equity portfolio, the case for international diversification is... less compelling.
One thing I like about being invested in international is that as US stocks have kept racing higher, I can still buy international stocks according to my IPS. So I can let the winners run (US stocks) while hopefully buying ex-US stocks at a discount (hasn't really worked so far . . . but VXUS does pay a nice dividend) but my hope is that eventually it does. Maybe I am just too good at looking at the bright side though . . . My ex-US investments have vastly underperformed. Brazilian stocks (EWZ) is back to where it was in 2015-2016 . . . it's crazy.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Tamalak »

Robot Monster wrote: Thu Jan 30, 2025 12:38 pm
Tamalak wrote: Thu Jan 30, 2025 12:09 pm Damn. Only 5 more days like this, and VXUS will be back where it was 4 years ago!
Currency is to blame for some of this, as the US dollar has strengthened a bunch since 4 years ago.
Speaking of, what caused the DXY to suddenly spike just a minute ago :shock:
ksualum
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by ksualum »

Tamalak wrote: Thu Jan 30, 2025 2:55 pm
Robot Monster wrote: Thu Jan 30, 2025 12:38 pm

Currency is to blame for some of this, as the US dollar has strengthened a bunch since 4 years ago.
Speaking of, what caused the DXY to suddenly spike just a minute ago :shock:
The possibility of tarrifs on Mexico and Canada
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

JBTX wrote: Mon Jan 27, 2025 11:01 pm Most of the arguments made here have been made multiple times before. At times I come across something that gives a different perspective.

https://en.m.wikipedia.org/wiki/Economi ... _Argentina

I listened to a podcast talking about Argentina. Early in the 20th century it was one of the most successful economies in the world on a per capita basis, and I think I heard it’s gdp per capita was 90% of the US. Then mid century things began to change and ultimately the bottom fell out.

By all accounts Argentina should be a successful country but it isn’t largely to political upheaval. In other words, things changed.

So it comes down to whether you are so confident that things in the US will not change relative vs the world such that you want ALL of you exposure here, or is there a reasonable possibility that things may change - as they inevitably always have in history, such that you’d like diversification elsewhere.

The answer seems pretty obvious to me.

In recent years we are seeing things here that I would have never expected to see. Whether that is good or bad is out of scope, but the point is things do change and they are changing.
One of the big questions about the "US exceptionalism" argument is how durable it is.

I don't know, but holding global market cap means I don't have to have an opinion because I'm letting the market drift as it will.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

Robot Monster wrote: Thu Jan 30, 2025 12:38 pm
Tamalak wrote: Thu Jan 30, 2025 12:09 pm Damn. Only 5 more days like this, and VXUS will be back where it was 4 years ago!
Currency is to blame for some of this, as the US dollar has strengthened a bunch since 4 years ago.
There are some economic / trade policy makers who want a weaker dollar to bolster US economic competitiveness in the export manufacturing sector.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

ksualum wrote: Thu Jan 30, 2025 2:17 pm
unwitting_gulag wrote: Mon Jan 27, 2025 11:27 am

Lots of candidate reasons:

1. Home country bias. A British investor would be biased towards British stocks... with truly devastating results in the 21st century so far.
2. Listening to "professional" commentary. For nearly a decade, we've been hearing how the US is overvalued and ex-US offers better prospects.
3. Consequences of EMH. Presumably investors worldwide have read Malkiel, Fama and the like. They're attracted to global market-cap.
4. Contrarian sentiments. If "everyone" is aware of something, and acting accordingly, then a contrarian would seek the opposite.
5. Insurance. People worldwide want to hedge their bets, so even if they believe that 100% is best for max-profits, they diversify to ex-US.
6. Inertia. It takes a long time for ideas to diffuse as actions.

I also wanted to comment on an earlier post about diversification, where the person in question owns their residence in the US, and has rental property in the US, and is thinking about diversification via ex-US stocks, and presumably also has a good W2 salary in the US. In that case, yes, the case for ex-US feels more compelling. But for a person who owns zero real estate, has a crummy salary or is retired, and has a large equity portfolio, the case for international diversification is... less compelling.
One thing I like about being invested in international is that as US stocks have kept racing higher, I can still buy international stocks according to my IPS. So I can let the winners run (US stocks) while hopefully buying ex-US stocks at a discount (hasn't really worked so far . . . but VXUS does pay a nice dividend) but my hope is that eventually it does. Maybe I am just too good at looking at the bright side though . . . My ex-US investments have vastly underperformed. Brazilian stocks (EWZ) is back to where it was in 2015-2016 . . . it's crazy.
You have a Brazil-specific allocation?
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Andy12345 »

Does fidelity have a total world index fund? When I searched for fidelity total world I came up with total international funds. I’m considering shifting to global market weight for various reasons and I’d like to do this with a single fund instead of having to rebalance because I am super lazy and prone to doing nothing.
ksualum
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by ksualum »

watchnerd wrote: Thu Jan 30, 2025 7:03 pm
ksualum wrote: Thu Jan 30, 2025 2:17 pm

One thing I like about being invested in international is that as US stocks have kept racing higher, I can still buy international stocks according to my IPS. So I can let the winners run (US stocks) while hopefully buying ex-US stocks at a discount (hasn't really worked so far . . . but VXUS does pay a nice dividend) but my hope is that eventually it does. Maybe I am just too good at looking at the bright side though . . . My ex-US investments have vastly underperformed. Brazilian stocks (EWZ) is back to where it was in 2015-2016 . . . it's crazy.
You have a Brazil-specific allocation?
No just making a point how bad some international has been
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Tom_T »

Andy12345 wrote: Thu Jan 30, 2025 7:54 pm Does fidelity have a total world index fund? When I searched for fidelity total world I came up with total international funds. I’m considering shifting to global market weight for various reasons and I’d like to do this with a single fund instead of having to rebalance because I am super lazy and prone to doing nothing.
Why wouldn't you just buy VT ?
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Andy12345 »

Tom_T wrote: Thu Jan 30, 2025 8:10 pm

Why wouldn't you just buy VT ?
Because I’m at fidelity
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by lostdog »

Andy12345 wrote: Thu Jan 30, 2025 10:08 pm
Tom_T wrote: Thu Jan 30, 2025 8:10 pm

Why wouldn't you just buy VT ?
Because I’m at fidelity
You can buy the VT ETF at Fidelity.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by CraigTester »

"There has never been a technological revolution that didn’t lead to a bubble in modern times",

https://awealthofcommonsense.com/2025/0 ... -a-bubble/

Question:

If the above quote is correct, are we better off for the moment to fully participate as a 100% US'er (assuming the epicenter of AI will remain in the US) or are we wiser to "preemptively" be diversified into the broader market where bubble type-valuations appear nowhere to be seen?
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by nalor511 »

lostdog wrote: Thu Jan 30, 2025 10:12 pm
Andy12345 wrote: Thu Jan 30, 2025 10:08 pm

Because I’m at fidelity
You can buy the VT ETF at Fidelity.
With fractional shares and automatic investments as needed
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Billy C
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Billy C »

CraigTester wrote: Fri Jan 31, 2025 8:55 pm "There has never been a technological revolution that didn’t lead to a bubble in modern times",

https://awealthofcommonsense.com/2025/0 ... -a-bubble/

Question:

If the above quote is correct, are we better off for the moment to fully participate as a 100% US'er (assuming the epicenter of AI will remain in the US) or are we wiser to "preemptively" be diversified into the broader market where bubble type-valuations appear nowhere to be seen?
An investor should follow their IPS.

If ex-U.S. stocks outperform over the next decade, as everyone expects, that would merely be a temporary phase within a much larger cycle. Timing that phase is impossible, as we’ve seen from all the lousy forecasts that have been occurring for over a decade.
“I am skeptical that international funds will add substantial value for the long-term investor.” ― John C. Bogle
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Nathan Drake »

Billy C wrote: Fri Jan 31, 2025 10:17 pm
CraigTester wrote: Fri Jan 31, 2025 8:55 pm "There has never been a technological revolution that didn’t lead to a bubble in modern times",

https://awealthofcommonsense.com/2025/0 ... -a-bubble/

Question:

If the above quote is correct, are we better off for the moment to fully participate as a 100% US'er (assuming the epicenter of AI will remain in the US) or are we wiser to "preemptively" be diversified into the broader market where bubble type-valuations appear nowhere to be seen?
An investor should follow their IPS.

If ex-U.S. stocks outperform over the next decade, as everyone expects, that would merely be a temporary phase within a much larger cycle. Timing that phase is impossible, as we’ve seen from all the lousy forecasts that have been occurring for over a decade.
We have no idea whether the next phase is short lived and temporary. That's completely unknowable. Your IPS should reflect that humility.
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Billy C
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Billy C »

Nathan Drake wrote: Fri Jan 31, 2025 10:30 pm
Billy C wrote: Fri Jan 31, 2025 10:17 pm

An investor should follow their IPS.

If ex-U.S. stocks outperform over the next decade, as everyone expects, that would merely be a temporary phase within a much larger cycle. Timing that phase is impossible, as we’ve seen from all the lousy forecasts that have been occurring for over a decade.
We have no idea whether the next phase is short lived and temporary. That's completely unknowable. Your IPS should reflect that humility.
My IPS is designed to navigate through any market phase by banking on the long-term strength of the U.S. We can't predict the future, but I trust in the proven patterns of history and the clear advantages of lower costs, taxes, and complexity.
“I am skeptical that international funds will add substantial value for the long-term investor.” ― John C. Bogle
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Nathan Drake »

Billy C wrote: Fri Jan 31, 2025 10:49 pm
Nathan Drake wrote: Fri Jan 31, 2025 10:30 pm

We have no idea whether the next phase is short lived and temporary. That's completely unknowable. Your IPS should reflect that humility.
My IPS is designed to navigate through any market phase by banking on the long-term strength of the U.S. We can't predict the future, but I trust in the proven patterns of history and the clear advantages of lower costs, taxes, and complexity.
Yes, and that IPS should reflect the possibility that the US market will have less total returns than exUS from now until you stop being an investor
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

Things could get pretty interesting in the US vs ex-US debate soon.

I expect Monday to be volatile.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by cosmos »

watchnerd wrote: Sat Feb 01, 2025 3:01 pm Things could get pretty interesting in the US vs ex-US debate soon.

I expect Monday to be volatile.
Popcorn is ready on many fronts.
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watchnerd
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

cosmos wrote: Sat Feb 01, 2025 3:30 pm
watchnerd wrote: Sat Feb 01, 2025 3:01 pm Things could get pretty interesting in the US vs ex-US debate soon.

I expect Monday to be volatile.
Popcorn is ready on many fronts.
Glad I don't have all my eggs in one basket.

Although the outcomes could certainly end up symmetrical, anyway.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by cosmos »

watchnerd wrote: Sun Feb 02, 2025 9:09 am
cosmos wrote: Sat Feb 01, 2025 3:30 pm

Popcorn is ready on many fronts.
Glad I don't have all my eggs in one basket.

Although the outcomes could certainly end up symmetrical, anyway.
yeah, I have seen recessions I guess might be able to add one more thing that rhymes with them soon.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Billy C »

I saw that Vanguard announced today that they are lowering the expense ratio on VXUS from 8 bp to 5 bp. I actually consider this is a big deal. That means $300 dollars greater return for every $ million invested per year.

Congratulations. I’m actually a little bit jealous that none of my U.S. stock funds received an expense ratio cut.
“I am skeptical that international funds will add substantial value for the long-term investor.” ― John C. Bogle
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Tamalak »

Billy C wrote: Mon Feb 03, 2025 10:01 am I saw that Vanguard announced today that they are lowering the expense ratio on VXUS from 8 bp to 5 bp. I actually consider this is a big deal. That means $300 dollars greater return for every $ million invested per year.

Congratulations. I’m actually a little bit jealous that none of my U.S. stock funds received an expense ratio cut.
Wow. That is a very big deal for me!
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by bople »

VT also went from 7 bp to 6 bp, making "VT and chill" a bit nicer. ;)
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by Robot Monster »

Billy C wrote: Mon Feb 03, 2025 10:01 am I saw that Vanguard announced today that they are lowering the expense ratio on VXUS from 8 bp to 5 bp. I actually consider this is a big deal. That means $300 dollars greater return for every $ million invested per year.

Congratulations. I’m actually a little bit jealous that none of my U.S. stock funds received an expense ratio cut.
VEA and VOO now have an equal expense ratio of 0.03%.

VEA = Vanguard FTSE Developed Markets ETF
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by steve r »

Andy12345 wrote: Thu Jan 30, 2025 10:08 pm
Tom_T wrote: Thu Jan 30, 2025 8:10 pm

Why wouldn't you just buy VT ?
Because I’m at fidelity
No. No such mutual fund.

But FFNOX that is a global fund with 15% bonds. It is a touch overweight small/mid U.S. and emerging markets -- just a touch. It's bond tilt toward longer term treasuries which I like for diversification purposes. It is super easy to own (it is by far my largest holding).
"Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. ..Don't look for the needle in the haystack. Just buy the haystack." Jack Bogle
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

If a trade war happens, single country risk (for any country) could get amplified.

Owning global market would seem to be a way to play all sides
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US vs international stocks performance including dividends

Post by Majdan »

[Merged into the ongoing "US vs International" debate - moderator oldcomputerguy]

Are US stocks really far superior if you look at long term performance including dividends?

TL;DR
US stocks are known to be superior to international stocks which was the case especially recently. But let's compare that with developed and emerging markets:
- VTI (total US market): ~9% growth + 1.25% dividend = 10.25% total return
- VEA (developed markets): ~3.05% growth + 5.6% dividend = 8.65% total return
- VWO (emerging markets): ~5.7% growth + 9.5% dividend = 15.2% total return
Source: growth since inception from Vanguard page, dividend from dividend.com

While I know that emerging markets are more volatile and you pay taxes on dividends, and that US stocks are still probably better especially if you look at prospects, but are they really that far better?
Or I am missing something here?

Also, is there any tool that would show me a chart of total return of given ETF/fund (including dividends)?
It would be nice if you could plot there you income tax rate per year and it would include that in the chart too, showing also tax already paid so far. I am a software engineer and this is really simple stuff.
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Re: US vs international stocks performance including dividends

Post by Billy C »

Majdan wrote: Sat Feb 08, 2025 7:43 am Are US stocks really far superior if you look at long term performance including dividends?
Yes. U.S. stocks have had far superior returns during our investment lifetime, which ultimately is all that matters.

The following chart from Portfolio Visualizer includes dividends, which are all reinvested. Notably the chart doesn’t include the higher costs/taxes of international stocks during this period, which would make the difference even more stark.

Image

The degree of U.S. outperformance recently has been higher than the long-term average.

Going back as far as we have available data, to 1790, U.S. stocks have outperformed international stocks by 2.5% annually for the past 235 years.
“I am skeptical that international funds will add substantial value for the long-term investor.” ― John C. Bogle
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Re: US vs international stocks performance including dividends

Post by Valuethinker »

Billy C wrote: Sat Feb 08, 2025 9:17 am
Majdan wrote: Sat Feb 08, 2025 7:43 am Are US stocks really far superior if you look at long term performance including dividends?
Yes. U.S. stocks have had far superior returns during our investment lifetime, which ultimately is all that matters.

The following chart from Portfolio Visualizer includes dividends, which are all reinvested. Notably the chart doesn’t include the higher costs/taxes of international stocks during this period, which would make the difference even more stark.

Image

The degree of U.S. outperformance recently has been higher than the long-term average.

Going back as far as we have available data, to 1790, U.S. stocks have outperformed international stocks by 2.5% annually for the past 235 years.
I think you are really seeing the impact of Japan in that graph?

It's not to argue that it is some kind of misrepresentation. The numbers are the numbers.

But it was an odd situation in 1989, where Japan was nearly 40% of the world market capitalisation v less than 10% now. That's not possible again - only the US has anything like that kind of preponderance in the global indices.

See p 11 of the exec summary of the UBS (formerly Credit Suisse) Returns Yearbook.

https://www.ubs.com/global/en/investmen ... rbook.html
Going back as far as we have available data, to 1790, U.S. stocks have outperformed international stocks by 2.5% annually for the past 235 years.
I am very sceptical of "as far back as 1790". US stock market in 1790? London and Amsterdam one has enough trouble with making an index back that far. US security prices say before the American Civil War are definitely suspect.

The numbers from Dimson Marsh Staunton since 1900 are engrained into my mind:

- US returned 6.5% real over that period. World ex US 4.3% real. (See reference to UBS returns book, above).

A significant part of the US outperformance was speculative return. That is defined as increases in valuation, as opposed to increases in dividends (earnings growth and dividends will track each other, unless there is a permanent shift in payout ratios. Broadly in the USA that has been headed downwards (less dividends paid out) but as share buybacks are now the most common form of cash distribution to shareholders, that effect is probably pretty muted). So whether you take Price to Earnings ratio, or Price to Book, or any other valuation metric, the US now is much more expensive than other international markets. It is anybody's guess as to whether that outperformance can continue.

Given survivor bias (of all the markets tracked, the US is the top except for Australia and South Africa, I believe; many markets had -100% return during parts of the turbulent 20th century) it would be unwise to expect the US market to keep returning 6% real, except in the very long run (perhaps 30 years +). Somewhere between 3% real and 5% real is probably reasonable.
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Re: US vs international stocks performance including dividends

Post by IDpilot »

Majdan wrote: Sat Feb 08, 2025 7:43 am Are US stocks really far superior if you look at long term performance including dividends?

TL;DR
US stocks are known to be superior to international stocks which was the case especially recently. But let's compare that with developed and emerging markets:
- VTI (total US market): ~9% growth + 1.25% dividend = 10.25% total return
- VEA (developed markets): ~3.05% growth + 5.6% dividend = 8.65% total return
- VWO (emerging markets): ~5.7% growth + 9.5% dividend = 15.2% total return
Source: growth since inception from Vanguard page, dividend from dividend.com
...
Or I am missing something here?
Yeh you are missing something here. You are double counting the dividends. The growth since inceptions returns on the Vanguard pages are Total Returns and thus already include the dividend. So as of 1/31/2025

- VTI (total US market): 9.00% total return since 5/24/2001
- VEA (developed markets): 3.08% total return since 7/20/2007
- VWO (emerging markets): 5.65% total return since 3/4/2005
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Re: US vs international stocks performance including dividends

Post by Nathan Drake »

Billy C wrote: Sat Feb 08, 2025 9:17 am
Majdan wrote: Sat Feb 08, 2025 7:43 am Are US stocks really far superior if you look at long term performance including dividends?
Yes. U.S. stocks have had far superior returns during our investment lifetime, which ultimately is all that matters.

The following chart from Portfolio Visualizer includes dividends, which are all reinvested. Notably the chart doesn’t include the higher costs/taxes of international stocks during this period, which would make the difference even more stark.

Image

The degree of U.S. outperformance recently has been higher than the long-term average.

Going back as far as we have available data, to 1790, U.S. stocks have outperformed international stocks by 2.5% annually for the past 235 years.
And again, this was because US stocks were valued lower than exUS at the time of the early 90s, we are now the opposite.

The main driver of US outperformance the last 30 years is mostly down to change in valuation. ExUS got cheaper, US got more expensive. Unlikely to repeat, so don't count on the next 30 years to play out the same.

Prior to this period, you had to be invested immediately post WW1 and WW2, where US came out unscathed. That "premium" only manifested in a few years.

The vast majority of the 1950-2010 period has been a coin flip between US/exUS

So ask yourself what is more likely.
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Re: International (Non-US) versus US Equities (The "Arguments")

Post by watchnerd »

WSJ:
Europe’s Unloved Stocks Are Suddenly on Top of the World
Cracks in the U.S. tech trade and brightening growth prospects in Europe have helped fuel a rebound
Europe’s economy is stuck in the doldrums and President Trump’s threat to hit the trade-dependent region next with tariffs risks making things worse. Yet European stocks are on a hot streak.

The German DAX has climbed more than 9% this year in dollar terms, and France’s CAC 40 is up about 8%. That is well above the 2.45% gain in the S&P 500. European indexes haven’t outpaced U.S. counterparts by such a wide mark at the start of a year since 2015, according to Dow Jones Market Data.
Some of the world’s best-performing large stocks this year include European banks like Société Générale and Banco Santander, and the luxury houses Burberry and Richemont.

The enthusiasm comes at an unlikely time. The eurozone ended 2024 with zero economic growth, and Trump said this week that he would hit the European Union “pretty soon” with tariffs, after initially focusing on Canada, Mexico and China.
And yet, a confluence of factors is boosting European markets.

Investors had expected Trump’s return to the White House would cement U.S. stock outperformance. But that belief has been shaken, after the rise of Chinese artificial-intelligence upstart DeepSeek and lackluster earnings from heavyweights such as Alphabet and Microsoft. In turn, that has pushed investors to reconsider unloved markets like those in Europe and Asia.

Meanwhile, the political, economic and profit outlook for Europe is improving, while hopes that Trump will negotiate a cease-fire between Ukraine and Russia have also boosted stocks, particularly in Eastern Europe.

“Europe was treated like it was almost uninvestible,” said Luca Paolini, chief strategist at Pictet Asset Management. “The sentiment on European stocks was so bad, any single positive thing would have a significant impact.”

One major draw of European indexes is that they look cheap versus U.S. counterparts. The S&P 500 trades at 22 times its projected earnings over the next 12 months, according to LSEG, compared with about 14 for the pan-continental Stoxx Europe 600 and 12 for U.K. stocks.
I don't think BH policy allows pasting of whole article, so more at:

https://archive.is/SJzyw#selection-5903.0-5951.271
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
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jeffyscott
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Re: US vs international stocks performance including dividends

Post by jeffyscott »

Majdan wrote: Sat Feb 08, 2025 7:43 am Are US stocks really far superior if you look at long term performance including dividends?
If restated as "US stocks have been...", then the answer is clearly: yes, the performance has been far superior.

Also, is there any tool that would show me a chart of total return of given ETF/fund (including dividends)?

Morningstar is one, here's Total US vs. Total International:

Image
ultrastar
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Re: US vs international stocks performance including dividends

Post by ultrastar »

Average return data almost always includes dividend payouts. I think you are unaware of this based on the data you’ve provided. Since 2001, VTI has grown on average 7.20% but has had a total average return of 9.13% with dividends.
tibbitts
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Re: US vs international stocks performance including dividends

Post by tibbitts »

Majdan wrote: Sat Feb 08, 2025 7:43 am ...Or I am missing something here?
...Also, is there any tool that would show me a chart of total return of given ETF/fund (including dividends)?[/i]
It would be nice if you could plot there you income tax rate per year and it would include that in the chart too, showing also tax already paid so far. I am a software engineer and this is really simple stuff.
You're missing that everybody is already using tools that compare total return including dividends.

If you believe it's simple to do what you're asking (including federal and state income taxes, FTC, etc.), you should monetize that.
Wwwdotcom
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Re: US vs international stocks performance including dividends

Post by Wwwdotcom »

Nathan Drake wrote: Sat Feb 08, 2025 4:13 pm
Billy C wrote: Sat Feb 08, 2025 9:17 am

Yes. U.S. stocks have had far superior returns during our investment lifetime, which ultimately is all that matters.

The following chart from Portfolio Visualizer includes dividends, which are all reinvested. Notably the chart doesn’t include the higher costs/taxes of international stocks during this period, which would make the difference even more stark.

Image

The degree of U.S. outperformance recently has been higher than the long-term average.

Going back as far as we have available data, to 1790, U.S. stocks have outperformed international stocks by 2.5% annually for the past 235 years.
And again, this was because US stocks were valued lower than exUS at the time of the early 90s, we are now the opposite.

The main driver of US outperformance the last 30 years is mostly down to change in valuation. ExUS got cheaper, US got more expensive. Unlikely to repeat, so don't count on the next 30 years to play out the same.

Prior to this period, you had to be invested immediately post WW1 and WW2, where US came out unscathed. That "premium" only manifested in a few years.

The vast majority of the 1950-2010 period has been a coin flip between US/exUS

So ask yourself what is more likely.
Alternatively, the differences in returns exist because the industries represented in US and EX-US are quite different. Hence different valuations and different returns.
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