What percent international?

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RK
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What percent international?

Post by RK »

I thought the idea behind indexing's long term success over most actively managed funds is that you "own the market". However, if you look at the global market, only 41.72% is in U.S. equities(MSCI All Country Index). Therefore, it would seem reasonable to assign 60 percent of your equity holdings to a total international index fund and 40% to a total U.S. index stock fund. However, I'd be reluctant to do so because Vanguard recommends a 20% international allocation and most other model portfolios I have seen show a much smaller portion in international. What research is there to support a specific percentage of international equities in a portfolio? Thanks.
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Sorry wrong forum

Post by RK »

Sorry. I just registered and this was my first post. Got it in the wrong forum. Not sure how I did that. Must have been in the Forum Issues and Administration when I registered?
Ralph

[moved to proper forum by Moderator Mel]
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Post by LH2004 »

If you're working in the U.S., that's already a big exposure to the U.S. economy for most people; holding the market fraction is way too much U.S. I would only get up near 40% U.S. if I were retired or within a few years of retirement.
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Post by PiperWarrior »

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RK
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Thanks PiperWarrior!

Post by RK »

Thanks for the links regarding international investing. They provided a wealth of information! I was struck by one of the statements in the abstract by Gary Burtless - "Remarkably, retirement savers in nearly all countries would have obtained higher average pensions with a 100% foreign allocation than with a 100% domestic allocation, even if they followed extremely naïve strategies in allocating equity investments across different foreign markets.".
Furthermore Vanguard says, "Empirical and practical issues suggest a starting allocation to international stocks of 20%, with an upper limit based on the proportion of the global market they represent.". The current upper limit, based upon the MSCI All Country Index, would be about 60% international.
Finally, CyberBob's post suggests that a 70/30 split (domestic/international) produces the highest return.
Good stuff, thanks again.
Ralph
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Re: What percent international?

Post by Sunny Sarkar »

RK wrote:I thought the idea behind indexing's long term success over most actively managed funds is that you "own the market". However, if you look at the global market, only 41.72% is in U.S. equities(MSCI All Country Index). Therefore, it would seem reasonable to assign 60 percent of your equity holdings to a total international index fund and 40% to a total U.S. index stock fund.
The following is an excerpt from an article by William Sharpe:
Financial Economic theory suggests that the average investor should hold everything available, in market proportions, and arithmetic shows that this must be true. Of course, no investor is likely to be completely average. But it is still useful to know the composition of the so-called “global market portfolio”, which provides a baseline. To be sure, the values of its parts change from time to time as market prices change and securities are issued and expire. ...

The global market portfolio might be a good choice for a truly international investor, who lives in hotels and on airlines, pays taxes everywhere, consumes goods from all over the world, is of average age and risk tolerance, and so on. Of course this is not likely to describe anyone in this room. But the global market portfolio is a good place for you to start, tilting each of your investment positions in a direction that makes sense, based on the differences between your characteristics and those of this fictional global investor. Good investment advice will help you do this effectively.
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Post by bearcat98 »

https://institutional.vanguard.com/iip/pdf/ICRIECR.pdf

Seems to suggest that between 20% and 40% is good. 20% gives you significant diversification benefits, above 40% the benefits have been smaller and the potential risks could be bigger. Plus, the international funds are more expensive than the domestic funds.
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Post by Sphinx »

From a recent Scott Burns article:
From Fearless Forecasts, 2008

... There was a time when no one in their right mind would invest overseas because the U.S. of A. had a deeper market, better regulation, better accounting, better ratings for investment risk, and a better currency. Today, all those harmful barriers have been swept away.
:lol:
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thanks once again...

Post by RK »

to all who posted responses to my initial query. As usual, Diehards are great teachers.
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Post by Trev H »

I re-ran my crunch after getting 2007 YE Returns.
This time using US Market & International Market.

Code: Select all

1970-2007

TSM = Cap Weighted US Market
INTL = International Market

TSM/INTL---CAGR----STDEV---SHARPE
=================================
100/00-----10.90---16.91---.3711
90/10------11.11---16.61---.3879
80/20------11.29---16.50---.4006 * Volatility Bottom
70/30------11.45---16.59---.4087
60/40------11.58---16.86---.4121 * Max Sharpe
50/50------11.69---17.32---.4111
40/60------11.78---17.94---.4063
30/70------11.84---18.71---.3986
20/80------11.88---19.61---.3889
10/90------11.89---20.63---.3779 * Max Return
00/100-----11.88---21.74---.3663
=================================
TSM Data Sources
CRSP Market Decile 1-10 1970-1992
Vanguards Total Stock Market Index Fund 1993-2007

INTL Data Sources
MSCI EAFE Index 1970-1987 (Developed Only)
85% EAFE Index, 15% Emerging Markets Index 1988-1996
Vanguards Total International Index fund 1997-2007
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Post by jacqueeagonsr »

If I'm reading this Vanguard study correctly, we should be 20-40% International.
https://institutional.vanguard.com/iip/pdf/ICRIECR.pdf
Y'all read it, if you'd like, and tell us what you think. I belive this was written in October '06.
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Post by dougpnca »

J:

Just read the Vanguard paper & yes, the conclusion is 20-40% to int'l. That's consistent with Trevor's analysis showing minimum volatility @ 20% & max Sharpe ratio @ 40%.

One question that would be difficult to unwind is how much US firms (GE, Cat, Microsoft, etc.) derive from overseas & how much overseas firms (Toyota, Bayer, Petromex) derive from US. I'm sure the data exists but it's a lot to crunch.

You can get a general sense by doing M* x-ray on a fund. For instance, we own Dodge & Cox Balanced (supposed to be large cap US & bonds) and International. Yet when you x-ray them, Balanced has 13% overseas and International has 10% US & Canada. It's not a big deal to do but it means paying attention to the details (ah, where the devil always lurks) to get your AA where you want it. And of course re-checking occassionally.

My Vanguard planner recommended 15-20% of total portfolio foreign (we're retired) & I'm comfortable with that.
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Post by jacqueeagonsr »

dougpnca - thanks for the reply and opinion. I agree with you that it's hard that figure out how much of Ford is international and how much of Toyota is domestic.
Could you enlighten me on 'x-ray' - I'm not aware of that tool.
And, I was very impressed with my Vanguard planner BEFORE I put all my funds with them at retirement. But, I have not been impressed with the ones I've had for the last two years. Maybe a subject for another thread.
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J.
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Post by Adrian Nenu »

Optimum US/International mix?

- I wish someone could tell you but no one knows. You could take a look at TrevH's numbers and go with 70/30 or so. That's fine as long as the next 37 years are exactly the same worldwide as the last 37 years. Think about that for a while. What about the 1933-1970 data? Has the same 70/30 mix worked as well back then? Will 2007-2044 work out best with the same 70/30 optimal mix? No one knows. But it is reasonable to compromise on a 50/50 mix and diversify globally...because no one really knows.

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Post by nisiprius »

My sales resistance kicks in when I become aware that some kind of investment seems to be unusually popular and is starting to be talked about by everyone. These days, it's international equities that seem just a little too popular.

The conventional wisdom used to be that international equities were higher risk, higher reward than U. S. stocks.

When I superimpose the curves for international and U. S. indices, sure, there's some diversification, but basically they're both stock and they go up and down together for the most part.

Mixing in some international undoubtedly does give you the MPT uncorrelated-asset benefits, but I have to think that it's nowhere near as much as, say, mixing in bonds.

What bothers me is that international has been going like gangbusters lately, and I suspect it may include some foreign bubbles. There's nothing wrong with that if it's truly being held for the long term for diversification, but I suspect that some of the talk about high percentages of international is like the talk we're always hearing about 100% equities whenever the market has had a good run.

At some point, international is about diversification, and beyond that it's about chasing performance.
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Post by dougpnca »

J:

Re: x-ray. Go to Morningstar's website & under "tools" you'll find "instant x-ray". You need the ticker symbol for the fund & you can enter 100% to get a breakdown of a single fund. You can also enter your entire portfolio with the percentages of each fund to see the whole thing.

What I like about it for a specific fund is it breaks the whole thing into the 9 boxes plus giving you percentages. The general classification may be right ("mid cap blend") but it's going to have other stuff as well. It provides a greater depth of detail.

Regarding the Vanguard planner, that's how I started on this site. I posted an inquiry about others experiences with Vanguard's service. I think I titled it simply Vanguard Financial Planner & it was a few weeks ago now. Short story is I was unimpressed with their recommendations & found out most of the rest of the Bogleheads felt the service was a bit over-rated. Not bad advice or anything, just nothing that you wouldn't get here or in Bogles books.

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Post by dougpnca »

nisiprius:

See the post a few up by jacqueeagonsr. There's a link there to a paper from Vanguard regarding foreign asset allocation. There is one section entitled "Increasing global correlation" that's consistent with our observation. They also note that their data only goes back to 1970. Good paper.

Your point about the sales pitch is well taken. Vanguard's EM has done so well over the last few years it's about time for a tumble so I'm working my exposure down over the next few months. I read recently that Emerging Markets were less risky than US - a pretty clear sign of a top, to me anyway.

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Post by jacqueeagonsr »

D.R. Solin, in his book, The Smartest Investment Book You'll Ever Read, comes to four model portfolios depending on risk tolerance levels (low, med-low, med-high and high). All contain some percentage of international exposure, the highest being 24%. Scott Burns' Margarita portfolio recommends one third each in bonds, stocks and international. As much as I respect Mr. Burns, thats a bit high on the int'l portion for me. My personal level of tolerance is 40% total bonds, 40% S&P500 index and 20% international. I'm currently in VG's total international. But, based on recommendations in another thread, I'm considering VG's FTSE All-world ex-US.

(dougP - thanks for the x-ray tip - I'll go play with it)

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J.
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Global Couch Potato Portfolio

Post by Adrian Nenu »

Scott Burns' Margarita portfolio recommends one third each in bonds, stocks and international. As much as I respect Mr. Burns, thats a bit high on the int'l portion for me.
- that's Scott Burn's Global Couch Potato Portfolio. It's been around for years and contains three main asset classes. Sometimes he adds TIPS or Money Market funds. Since we cannot predict if the US or International will outperform, there is no logical reason to significantly overweigh one over the other. The main determinant of risk/return is the stock/bond/ cash mix which is different for everyone.

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Post by Valuethinker »

nisiprius wrote:
What bothers me is that international has been going like gangbusters lately, and I suspect it may include some foreign bubbles. There's nothing wrong with that if it's truly being held for the long term for diversification, but I suspect that some of the talk about high percentages of international is like the talk we're always hearing about 100% equities whenever the market has had a good run.

At some point, international is about diversification, and beyond that it's about chasing performance.
The only obvious bubbles in international, that don't seem to apply to the US, are in some emerging markets.

If Europe is overvalued, then the US is too, pretty much. Japan is interesting because it looks undervalued, but it's not doing too well as a market right now.

However on currencies the pound looks like it is in cloud-cuckoo land: bigger current account deficit/ GDP than the US, and government deficit to match. The Euro has a somewhat similar problem, but more to do with demographics and resistance to reforms than anything else-- there are serious political risks in the EU's future-- I could see one or two countries pulling out, and the Euro itself come under pressure.

It may be the 'bubble' is actually European bond markets, rather than stock markets.

The picture on the other side of the Pacific is murkier (to me) however there are the known political flashpoints.

If someone closes the Persian Gulf, where the US gets 15% of its oil, the markets will go down. But the Far Eastern economies, which get 85% of their oil from that source, will go down more.
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Post by jacqueeagonsr »

For those who might be interested, here's a link to Scott Burns' fund picks and portfolio mixes.
http://assetbuilder.com/Investing/inv_potato.aspx
The funds are in 'white' - the portfolio mixes are in 'blue'. the couch potato is the first 2 funds. margarita is the first 3. four square - the first 4, etc. all in equal proportions. i.e., 50/50 then 33/33/33 then 25/25/25/25, etc.
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Re: Thanks PiperWarrior!

Post by PiperWarrior »

RK wrote:CyberBob's post suggests that a 70/30 split (domestic/international) produces the highest return.
CyberBob's post uses developed international. See Trev H's post immediately below CyberBob's. Trev H's post takes emerging markets into account. You get the highest return at 30/70, but look at the pretty high standard deviation that comes with the return.

I wouldn't go beyond 50/50. Too much volatility for not much return.
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Post by LMK5 »

I have international stock mutual funds comprising 15% of my portfolio.
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Post by mikenz »

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Post by fundtalk »

If an investor is trying to determine their international allocation, there are some very good articles by Bill Bernstein on his Efficient Frontier website. He discusses the value of added noncorrelated asset classes to a portfolio.

Trev's backtested numbers show why you want to diversify. By adding international to an all domestic portfolio you gained return and decreased volatility. But, even more interesting, despite the fact that international outpaced domestic over this time period, you actually increased return and decreased risk by adding US stocks to an all international portfolio. So even if your completely convinced that either US or international stocks are going to outperform, it makes sense to own both.

It's also interesting that the difference between 30% and 50% in international is minimal in terms of return and risk over long time frames, but people on here will seem to obsess over it endlessly. Pick a number and stick with it.
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Post by jacqueeagonsr »

mikenz - many thanks for the post to last year's poll - I was not a member of the forum back then - I would guess that, over time, the same subjects get repeated often, and, like this one, from new members like me.
Again, thanks for remembering -
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Post by RK »

Like jacqueeagonsr, I was a newcomer to the diehards forum, so missed the previous thread on international allocation. My current international is 24.2% of the stock portion of my portfolio, which is 50/50 stocks and bonds. Have been retired for several years. Think I'll stick with this allocation. Thanks.
Ralph
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Post by mikenz »

mikenz - many thanks for the post to last year's poll - I was not a member of the forum back then - I would guess that, over time, the same subjects get repeated often, and, like this one, from new members like me.
Again, thanks for remembering
If you liked that, you'll love this one! It's a good one to bookmark.

http://diehards.org/forum/viewtopic.php ... =composite
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Post by jacqueeagonsr »

mike - thanks again!! bookmarked that one for sure - I have a lot of reading to do - many of the topics I might like to discuss already have been.
I will digress for a second - some of the titles reminded me of this quip.

There are 10 kinds of people who understand binary. Those who do and those who don't.

Enjoy -
J.
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Post by jacqueeagonsr »

And, back to the original query,
What percent international?
I am moving to a very simplifed asset allocation of 40% domestic stock funds, 40% total bond fund, and 20% international fund(s).
(all Vanguard)
My decisions now are exactly which domestic funds (VTSAX and/or VAARX) and which international (VGTSX or VFWIX). The bonds will most likley be VBTLX (close second place is VBILX). I'm keeping my eyes open on the TIPS fund if Big Ben renegs and starts up the printing presses (inflationary, like the late '70's, early '80's)
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Post by ken250 »

I would have thought the problems with cap-weighting exposed by 2000 would lead DHs to shy away from cap-weighting on a global scale.
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Post by Opponent Process »

ken250 wrote:I would have thought the problems with cap-weighting exposed by 2000 would lead DHs to shy away from cap-weighting on a global scale.
no, but I think if the fundamental indexes start doing well, a lot of DHs might move some money over to them. this won't happen if growth continues to make a comeback.

fundamental indexing works equally well across all regions.

remember, a lot of DHs use a combination of a cap-weighted index plus some kind of value-tilt (or even "active-tilt"). therefore, they take advantage of any irrational pricing in, say, TSM, by rebalancing into SV.

what 2000 taught us is to not hold, say, the S&P500 index by itself. this is what was preached a lot in the 90's.
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Post by jacqueeagonsr »

continuing OP's thoughts, both VGSTX and VFWIX invest in approx 2200 companies outside the US and both x-ray just about equal in Stock Style Diversification. Ken - could you expand on your comment a bit. I'm not understanding what you are trying to say.
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Post by ken250 »

OP,

Sorry to give the wrong impression that I was referring to forms of indexing, but after rereading my post I could see how that happened.

What I was referring to was the rationale for going 50/50 US/Int'l, which is essentially based on the current capitalizations of the two regions.

This "pumping more money into winners" is exactly what happened several years ago, as certain sectors grew the broad indexes cap-weighted those sectors and when those sectors got hit the broad indexes got hit.

It's not too hard to only go back at most 5 years and find cap data that would dictate a 60/40 weighting in favor of the US, and now so soon after that we're supposed to believe 60/40 in favor of Int'l is justified?

Besides the debatable vulnerabilities of cap-weighting it seems a little bit like TAA on the part of some DHs.
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Post by Rodc »

A pure cap weight portfolio might be a good starting position if you could get true a global cap weighted portfolio where each region and each cap weight, large, small, etc carried the same cost (regulation, ER, trading cost, same low rate of bribes paid to the government, etc). In general though some regions/cap weights are either missing (say in a 401k) or expensive to get a hold of. Since you can't just go out and get a true total international fund like you can a true domestic TSM fund, it would seem that something lower in internationals than a simple cap weight is a good starting place.
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Solin's book

Post by Gregory »

[quote="jacqueeagonsr"]D.R. Solin, in his book, [i]The Smartest Investment Book You'll Ever Read[/i], comes to four model portfolios depending on risk tolerance levels (low, med-low, med-high and high). All contain some percentage of international exposure, the highest being 24%. Scott Burns' Margarita portfolio recommends one third each in bonds, stocks and international. As much as I respect Mr. Burns, thats a bit high on the int'l portion for me. My personal level of tolerance is 40% total bonds, 40% S&P500 index and 20% international. I'm currently in VG's total international. But, based on recommendations in another thread, I'm considering VG's FTSE All-world ex-US.

(dougP - thanks for the x-ray tip - I'll go play with it)

Regards,
J.[/quote]
-------------------------------------------------
Solin's book seems very "dumbed down" to me, and I've read it twice to ensure I didn't miss any "pearls." Particularly troubling was his lack of significant discussion of LCV; he essentially railed against too much SCV in a portfolio (fair enough, "too much" isn't prudent for most folks), but he seems to have dismissed LCV.

Solin's book is the "Carnival Cruise Line" version of indexing investment books. I'll take Gibson's or Bernstein's Regent Cruise Line versions any day.

Greg
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Post by ken250 »

Hey Greg,

I'll take S&D ahead of Solin, BB, LS, RF anyday.

Good to you see understanding the how and whys, Ken.

BTW, In case you haven't noticed the best advice is over on that other forum.
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I doubt that international matters!

Post by nisiprius »

It seems to me that the wide range of "conventional-wisdom" recommendations on international percentage shows that in fact, it doesn't matter much how much you have.

If international had a long, consistent track record of being significantly uncorrelated with U. S. stocks, then modern portfolio theory would give a sharp, value for optimum percentage in the mix, and conventional-wisdom recommendations would cluster around that value.

If international in fact behaved pretty much like U. S. stocks, except possibly for having a beta greater than one, then it's almost the same stuff and it doesn't matter how much you have, and recommendations would be all over the map... with higher percentages being used by people who were at 100% equities and wanting higher reward and willing to accept higher risk than a 100%-US-equities portfolio.

Which is what we do see.

I'm surprised that we haven't had anyone vocally advocating a portfolio consisting 100% of non-US equities, though. Are we all wimps? Or would that be considered unpatriotic?
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Re: I doubt that international matters!

Post by Valuethinker »

nisiprius wrote:
I'm surprised that we haven't had anyone vocally advocating a portfolio consisting 100% of non-US equities, though. Are we all wimps? Or would that be considered unpatriotic?
You'd have such massive currency risk unless you spend your life outside the USA. What if the US dollar does a 1985 and goes 1 for 1 with the pound?

Being a contrarian, that is more likely than not in the next 10 years. (I don't think it's very likely though).

On correlations, Japan has relatively low correlation (in the 1989-03 period of course, that is because Japan went down when the rest of the world went up). Europe is much closer correlation to US (0.8 or so, I think). Small cap value (global) has lower correlation (around 0.5 I think).
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Post by rkbrashear »

What percent international?

"Your foreign equity should absolutely be no higher than it was in 2002. I'm certainly a good deal less sanguine about buying foreign equity than I was in 2002."

William Bernstein, MD

http://www.foxbusiness.com/markets/indu ... 246_9.html
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FWIW

Post by james22 »

In France and Germany, schools have helped ingrain a serious aversion to the market economy. In a 2005 poll, just 36 per cent of French citizens said they supported the free enterprise system. In Germany, support for socialist ideals is running at all-time highs: 47 per cent in 2007 versus 36 per cent in 1991. In both countries, attempts at economic reform have been routinely blocked by a consensus against policies considered “pro-market”.

Might some of this be traced to the ideas instilled at school? In a project for the German Marshall Fund, I analysed French, German and US high-school curricula and textbooks for their coverage of the economy, the welfare state, entrepreneurship and globalisation. “Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer,” asserts Histoire du XXe siècle, a text memorised by French high-school students as they prepare for entrance exams to prestigious universities.

Start-ups, the book tells students, are “audacious enterprises” with “ill-defined prospects”. Then it links entrepreneurs with the technology bubble, the Nasdaq crash and massive redundancies across the economy.

Think “creative destruction” without the “creative”...It is no surprise that the continent’s schools teach through a left-of-centre lens. The surprise is the intensity of the anti-market bias. Students learn that companies destroy jobs, while government policy creates them. Globalisation is destructive, if not catastrophic. Business is a zero-sum game.

If this is the belief system within which most students develop intellectually, is it any wonder French and German reformers are so easily shouted down?

http://www.ft.com/cms/s/0/3f03314e-bd3e ... ck_check=1
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baw703916
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Post by baw703916 »

If this is the belief system within which most students develop intellectually, is it any wonder French and German reformers are so easily shouted down?
Well, you have to take that with a grain of salt...after all, the eastern europeans were indoctrinated in the genius of marxism for 40 years, and didn't show a lot of hesitation in unceremoniously dumping it.

Best wishes,
Brad
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grumel
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Post by grumel »

In a project for the German Marshall Fund
The fact that he did get money from the German staate to do this study pretty much undermines already the entire picture hes drawing.
Marco
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Re: Thanks PiperWarrior!

Post by Marco »

PiperWarrior wrote:
RK wrote:CyberBob's post suggests that a 70/30 split (domestic/international) produces the highest return.
CyberBob's post uses developed international. See Trev H's post immediately below CyberBob's. Trev H's post takes emerging markets into account. You get the highest return at 30/70, but look at the pretty high standard deviation that comes with the return.

I wouldn't go beyond 50/50. Too much volatility for not much return.
Not much return? Take a look at the Matthews Asian Funds returns for 2007. Look specifically at their India fund (MINDX) and China fund (MCHFX). Not bad performance. Certainly better than my Vanguard International Value and Dodge & Cox did last year. I'm going to at least 50/50.
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RK
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Re: Thanks PiperWarrior!

Post by RK »

Marco wrote:
PiperWarrior wrote:
RK wrote:CyberBob's post suggests that a 70/30 split (domestic/international) produces the highest return.
CyberBob's post uses developed international. See Trev H's post immediately below CyberBob's. Trev H's post takes emerging markets into account. You get the highest return at 30/70, but look at the pretty high standard deviation that comes with the return.

I wouldn't go beyond 50/50. Too much volatility for not much return.
Not much return? Take a look at the Matthews Asian Funds returns for 2007. Look specifically at their India fund (MINDX) and China fund (MCHFX). Not bad performance. Certainly better than my Vanguard International Value and Dodge & Cox did last year. I'm going to at least 50/50.
I know some sectors in international have done well in recent years, but won't that frequently be the case when compared to a broad-based fund? For example International Value only has 1.4% of its holdings in China equities, and therefore will lag behind sector winners. However, when Chinese equities plunge, International Value might be looking good!
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Post by Fundhunter »

Between this Forum and the Morningstar VG Forum this topic comes up every few months and I always read it. And the lack of a consensus on this is as alive and well today as it has been for years!!

Vanguard and the authors of the Boglehead Guide are on the low end at 20% of equities- this probably reflects the Jack Bogle position that used to be that international is unnecessary. On the high end is the % that international bears to the world market. That's quite a spread! :?

Maybe globalization has lessened the diversification benefit, but it also has diminished the argument that these foreign markets are so corrupt and poorly regulated that it's too risky to invest in them.

I am at 25% of equities in foreign, for no reason that is any better than the other reasons people give for a %. Just seems like a happy medium to me.
grumel
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Post by grumel »

Another aproach that lowers the US percentage even more would be to weight countries after their gdp - maybe even after purchase power parity. Now how do you like that percentage of us holdings. This one is also a great system to ratinoalice performance chasing in emerging markets :lol:.
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Post by Opponent Process »

Fundhunter wrote:Between this Forum and the Morningstar VG Forum this topic comes up every few months and I always read it. And the lack of a consensus on this is as alive and well today as it has been for years!!

Vanguard and the authors of the Boglehead Guide are on the low end at 20% of equities- this probably reflects the Jack Bogle position that used to be that international is unnecessary. On the high end is the % that international bears to the world market. That's quite a spread! :?

Maybe globalization has lessened the diversification benefit, but it also has diminished the argument that these foreign markets are so corrupt and poorly regulated that it's too risky to invest in them.

I am at 25% of equities in foreign, for no reason that is any better than the other reasons people give for a %. Just seems like a happy medium to me.
happy mediums are fine. I've been in the global-weight camp since 2002. our camp is just frightened to see people with 100% US (or any one country), and happy to see Bogle embrace international investing.

it's natural and understandable for people to want to overweight their home country. and for Americans this might not be as risky as for people in other countries.
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