Opinion on VTWAX [Vanguard Total World Stock]

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jo001di
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Opinion on VTWAX [Vanguard Total World Stock]

Post by jo001di »

Should i buy VTWAX.
What's your opinion.
I do own VTSAX - VFIAX and VDADX or should i just add on to my current holdings

THanks
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Wiggums
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Re: Opinion on VTWAX

Post by Wiggums »

Vanguard Total World Stock Index Fund Admiral Shares (VTWAX)

It’s tax efficient, low cost and diversified.

I’d buy it.
Last edited by Wiggums on Thu Feb 07, 2019 11:03 am, edited 1 time in total.
michaeljmroger
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Re: Opinion on VTWAX

Post by michaeljmroger »

I only see three potential reasons why someone wouldn't want to use VTWAX:

1. It makes TLH more difficult.
2. You have a strong opinion on having a different allocation for US/International.
3. Your portfolio is so large that the small ER difference bothers you.

None of these reasons outweighs the benefit of having a single stock fund in my opinion. Simplicity is key!
lostdog
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Re: Opinion on VTWAX

Post by lostdog »

michaeljmroger wrote: Thu Feb 07, 2019 10:52 am I only see three potential reasons why someone wouldn't want to use VTWAX:

1. It makes TLH more difficult.
2. You have a strong opinion on having a different allocation for US/International.
3. Your portfolio is so large that the small ER difference bothers you.

None of these reasons outweighs the benefit of having a single stock fund in my opinion. Simplicity is key!
+1

Are you a global market cap investor?

Are you easily swayed by people claiming the U.S. is superior therefore they have 0% international? There are others that hold a fixed international allocation. Are you easily swayed by recency bias, political views and ideologies against countries outside the U.S? Do you like to slice and dice? Many other factors...

Do you value simplicity? Do you invest with logic and no emotion? Than VTWAX is your fund.

https://www.youtube.com/watch?v=LwTHLtuToSY
snailderby
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Re: Opinion on VTWAX

Post by snailderby »

VTWAX is a good fund.

1. Are your current holdings U.S. only? (VTSAX/VFIAX/VDADX are all U.S.-only funds.)
2. Do you want to hold any international stocks?
3. If so, in what percentage?

See www.bogleheads.org/forum/viewtopic.php?t=196956; www.bogleheads.org/forum/viewtopic.php?t=256423; https://finpage.blog/2017/03/18/investi ... ld-part-1/; https://finpage.blog/2017/03/25/investi ... ld-part-2/; https://finpage.blog/2017/03/25/investi ... ld-part-3/; and https://personal.vanguard.com/pdf/icriecr.pdf.

Once you've decided whether you want to add international stocks to your portfolio, you can do that by buying VTWAX (total world), VTIAX (total world excluding U.S.), or even VTMGX + VEMAX (international developed + international emerging) in the correct ratio.
Last edited by snailderby on Thu Feb 07, 2019 2:10 pm, edited 2 times in total.
Every things free
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Re: Opinion on VTWAX

Post by Every things free »

VTWAX is a very good choice. I agree with the others who posted.
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ruralavalon
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Re: Opinion on VTWAX

Post by ruralavalon »

What sorts of accounts are you using?

jo001di wrote: Thu Feb 07, 2019 10:40 am Should i buy VTWAX.
What's your opinion.
I do own VTSAX - VFIAX and VDADX or should i just add on to my current holdings

THanks
Use Vanguard Total World Stock Index Fund Admiral Shares (VTWAX) ER 0.10% for your stock investments only if you want to have a 55/45 domestic/international (market weight) stock allocation.

If not, then don't.

My personal preference is about 25% of stocks in international stocks. Historically almost all of the maximum diversification benefit would have been captured with far less than market weight in international stocks. Vanguard paper "Considerations for Investing in Non-U.S Equities", p. 6. Market weight is not automatically the better allocation.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
xb7
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Re: Opinion on VTWAX

Post by xb7 »

ruralavalon wrote: Thu Feb 07, 2019 12:25 pm My personal preference is about 25% of stocks in international stocks. Historically almost all of the maximum diversification benefit would have been captured with far less than market weight in international stocks. Vanguard paper "Considerations for Investing in Non-U.S Equities", p. 6. Market weight is not automatically the better allocation.
This sort of post is exactly why I like scanning the boglehead forums --- thanks, an interesting thing to chew on.
The document you refer to is here: https://personal.vanguard.com/pdf/icriecr.pdf

I note that the article goes on to say that a significant weakness of the analysis is that it's backward-looking (of course ...) and particularly dependent on the time period examined. Which goes a little beyond just saying the boilerplate "past performance is no guarantee of future results".

I'm wondering if any of that logic applies on the bond side too, i.e., arbitrating percentages between VBTLX and VTABX. I set up my glide path to mirror the rough proportions that the target date funds use, but ... ?
I guess the equivalent document to what you referred to for stocks would be this one:
https://personal.vanguard.com/pdf/ISGGLBD.pdf

I found this one harder to work through; it talks a lot about hedging vs. not hedging, and not as much or as clearly about just the weighted benefits of relatively more or less international vs. domestic bonds.

But you got me thinking, so thanks!
retiringwhen
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Re: Opinion on VTWAX

Post by retiringwhen »

My wife and I have 8 differently labeled accounts at vanguard. This leaves me with many accounts to manage. With the lowered ER for VTWAX, I plan on taking all of the relatively small accounts and move them to a single fund holding (VTWAX). This will simplify my AA calculations and re-configurations over the long-term at the cost of 2-3 bp vs. holding chunks of VTSAX/VTIAX or related funds.

I will end up with 3 accounts that have the big money in them where I will likely continue to hold the classic 3-fund portfolio components and I can re-arrange the deck chairs as necessary. I hadn't done this previously because more than one of those accounts are not upgraded and I have no need/desire to upgrade just to hold ETFs that annoy me.

So now, I can fully execute this plan!
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ruralavalon
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Re: Opinion on VTWAX

Post by ruralavalon »

xb7 wrote: Thu Feb 07, 2019 1:05 pm
ruralavalon wrote: Thu Feb 07, 2019 12:25 pm My personal preference is about 25% of stocks in international stocks. Historically almost all of the maximum diversification benefit would have been captured with far less than market weight in international stocks. Vanguard paper "Considerations for Investing in Non-U.S Equities", p. 6. Market weight is not automatically the better allocation.
This sort of post is exactly why I like scanning the boglehead forums --- thanks, an interesting thing to chew on.
The document you refer to is here: https://personal.vanguard.com/pdf/icriecr.pdf

I note that the article goes on to say that a significant weakness of the analysis is that it's backward-looking (of course ...) and particularly dependent on the time period examined. Which goes a little beyond just saying the boilerplate "past performance is no guarantee of future results".

I'm wondering if any of that logic applies on the bond side too, i.e., arbitrating percentages between VBTLX and VTABX. I set up my glide path to mirror the rough proportions that the target date funds use, but ... ?
I guess the equivalent document to what you referred to for stocks would be this one:
https://personal.vanguard.com/pdf/ISGGLBD.pdf

I found this one harder to work through; it talks a lot about hedging vs. not hedging, and not as much or as clearly about just the weighted benefits of relatively more or less international vs. domestic bonds.

But you got me thinking, so thanks!
That Vanguard paper used data from 1969-2011, a period of 42 years.

Every analysis which uses any factual data is backward looking. You can't find the future facts, because those facts haven't happened yet.

Of course this does not guarantee a future result. You can find much debate here about the appropriate domestic/international stock allocation, pitting Efficient Market Hypothesis versus historical data (theory versus fact).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Vulcan
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Re: Opinion on VTWAX

Post by Vulcan »

ruralavalon wrote: Thu Feb 07, 2019 1:44 pm Of course this does not guarantee a future result. You can find much debate here about the appropriate domestic/international stock allocation, pitting Efficient Market Hypothesis versus historical data (theory versus fact).
Or you could just, you know... buy the haystack.

All this backtesting doesn't mean squat. The world is changing all the time, and the future will not be like the past.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Shabber
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Re: Opinion on VTWAX

Post by Shabber »

What is the generally accepted retirement portfolio theory on % of International equities?
Seems like 10% is a normal figure I see a lot.
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Re: Opinion on VTWAX

Post by michaeljmroger »

Shabber wrote: Thu Feb 07, 2019 2:16 pm What is the generally accepted retirement portfolio theory on % of International equities?
Seems like 10% is a normal figure I see a lot.
20%, but it's a highly controversial topic.
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Re: Opinion on VTWAX

Post by Shabber »

michaeljmroger wrote: Thu Feb 07, 2019 2:20 pm 20%, but it's a highly controversial topic.
Yeah, aren't they all on here geesh - LOL!
When backtesting I don't see many time periods where "Vanguard Total World Stock Index" beats the plain old "S&P 500 Index".
(please refrain from the "backtesting doesn't represent" blah, blah it gets old)
And just as a person, I have a lot of faith in the US Corporations vs. the World's. I see our companies taking advantage of international business and that being mixed into their returns already. In terms of tragic collapse, I see the US as least likely.
So....while I like diversification, I don't trust it enough to toss in the 10%.
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Vulcan
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Re: Opinion on VTWAX

Post by Vulcan »

Shabber wrote: Thu Feb 07, 2019 2:42 pm
michaeljmroger wrote: Thu Feb 07, 2019 2:20 pm 20%, but it's a highly controversial topic.
Yeah, aren't they all on here geesh - LOL!
When backtesting I don't see many time periods where "Vanguard Total World Stock Index" beats the plain old "S&P 500 Index".
(please refrain from the "backtesting doesn't represent" blah, blah it gets old)
And just as a person, I have a lot of faith in the US Corporations vs. the World's. I see our companies taking advantage of international business and that being mixed into their returns already. In terms of tragic collapse, I see the US as least likely.
So....while I like diversification, I don't trust it enough to toss in the 10%.
I drive Toyota's and Honda's - why should I only own GM and Ford stock?
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: Opinion on VTWAX

Post by jhfenton »

Shabber wrote: Thu Feb 07, 2019 2:16 pm What is the generally accepted retirement portfolio theory on % of International equities?
Seems like 10% is a normal figure I see a lot.
The normal range on BH is 0% to 50%. Vanguard's recommended range is 30% to 50%. Vanguard target retirement funds use 40%.
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Shabber
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Re: Opinion on VTWAX

Post by Shabber »

jhfenton wrote: Thu Feb 07, 2019 3:44 pm Vanguard target retirement funds use 40%.
Not sure about those number, but I do own some Vanguard Target Retirement 2020 Fund (VTWNX) and they are 33.5% Int'l which is much higher than I thought. I am shocked how high those numbers are. I guess I'm just not on board with the theory.
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Re: Opinion on VTWAX

Post by jhfenton »

Shabber wrote: Thu Feb 07, 2019 4:10 pm
jhfenton wrote: Thu Feb 07, 2019 3:44 pm Vanguard target retirement funds use 40%.
Not sure about those number, but I do own some Vanguard Target Retirement 2020 Fund (VTWNX) and they are 33.5% Int'l which is much higher than I thought. I am shocked how high those numbers are. I guess I'm just not on board with the theory.
I should be clearer. 40% of equity in TR funds is in ex-US. 30% of bonds in TR funds are ex-US.
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Re: Opinion on VTWAX

Post by sharukh »

I do 50 50. Because it is easy to rebalance.

But buying VT is better, no need to rebalance.
But I like 50 vti 50 vxus because it makes me feel like I did something. Solves my itch to do the tinkering with out causing much trouble.

Haha
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Re: Opinion on VTWAX

Post by jsmoove123 »

I love the idea of VTWAX as part of a 2-fund portfolio and am satisfied with its features including ~55:45 ratio, ER 0.10% etc. However, I have multiple 401k accounts that do not have commission-free VTWAX or VT. So ironically VTWAX would create more complexity in my overall asset accounting. I'm currently trying to decide whether it's worth paying trading commissions in order to achieve the simplicity of having 100% of my equities in VT/VTWAX.
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Re: Opinion on VTWAX

Post by lukestuckenhymer »

Shabber wrote: Thu Feb 07, 2019 4:10 pm
jhfenton wrote: Thu Feb 07, 2019 3:44 pm Vanguard target retirement funds use 40%.
Not sure about those number, but I do own some Vanguard Target Retirement 2020 Fund (VTWNX) and they are 33.5% Int'l which is much higher than I thought. I am shocked how high those numbers are. I guess I'm just not on board with the theory.
https://investor.vanguard.com/mutual-fu ... olio/vtwnx
The equity portion of VTWNX has 40% international stock, not 33.5%. Sorry to alarm you!
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Re: Opinion on VTWAX

Post by bluquark »

jsmoove123 wrote: Thu Feb 07, 2019 4:47 pm I love the idea of VTWAX as part of a 2-fund portfolio and am satisfied with its features including ~55:45 ratio, ER 0.10% etc. However, I have multiple 401k accounts that do not have commission-free VTWAX or VT. So ironically VTWAX would create more complexity in my overall asset accounting. I'm currently trying to decide whether it's worth paying trading commissions in order to achieve the simplicity of having 100% of my equities in VT/VTWAX.
Yeah I think most of us are in a similar position. Either due to 401k choices, or taxable funds that we’ve held for a while and don’t want to pay capital gains tax on. VTWAX is a perfect fit for my strategy in theory but I might never switch to it. I’ll instead keep managing with a spreadsheet my much more complex world market cap matching portfolio with a lower ER and better tax efficiency.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by Amadis_of_Gaul »

I was going to move all of my equity holdings into it, but then I learned about the magnitude and severity of currency risk. Based on historical data, the volatility sweet spot is enough international diversification that you don't get clobbered by country risk, but not so much that you get clobbered by currency risk. My current international allocation is 30 percent, which will hopefully protect me from the worst swings in either direction.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by lostdog »

Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by spdoublebass »

lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
lostdog
Do you have any tilts? (Small cap, reit, etc) or are you strictly global market cap?

Just curious.
I'm trying to think, but nothing happens
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by lostdog »

spdoublebass wrote: Thu Feb 07, 2019 9:46 pm
lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
lostdog
Do you have any tilts? (Small cap, reit, etc) or are you strictly global market cap?

Just curious.
Strictly global market cap.
pdavi21
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by pdavi21 »

In after-tax, VWO and VEA are more tax efficient in tandem than VXUS. VXUS can be more efficient than VTI, depending on bracket/div yield. VT will probably be in between VTI and VXUS.

I included only ETFs because, some recently have lower effective ERs than Admiral.

So, your question turns into:
1. Complexity and taking an educated guess at increasing tax efficiency, reducing ER
vs
2. Simplicity and taking an averagely tax efficient approach while reducing emotional risk
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by spdoublebass »

lostdog wrote: Thu Feb 07, 2019 9:49 pm
spdoublebass wrote: Thu Feb 07, 2019 9:46 pm
lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
lostdog
Do you have any tilts? (Small cap, reit, etc) or are you strictly global market cap?

Just curious.
Strictly global market cap.
Thanks.
It makes the most sense.

I’m always tempted to add REITs, but never have. Seems like once you tilt something it’s contagious and everything starts to look good. Ha
I'm trying to think, but nothing happens
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by bluquark »

spdoublebass wrote: Thu Feb 07, 2019 10:03 pm
lostdog wrote: Thu Feb 07, 2019 9:49 pm
spdoublebass wrote: Thu Feb 07, 2019 9:46 pm
lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
lostdog
Do you have any tilts? (Small cap, reit, etc) or are you strictly global market cap?

Just curious.
Strictly global market cap.
Thanks.
It makes the most sense.

I’m always tempted to add REITs, but never have. Seems like once you tilt something it’s contagious and everything starts to look good. Ha
Yeah this investing philosophy falls over when you get to bonds though. How many bonds relative to stocks? Hunches and personal feelings, otherwise you'd be like 90% bonds because there is way more money in bonds than in stocks in the world. Which bond funds? The indices are kind of incomplete and bogus and the active funds don't underperform.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by spdoublebass »

bluquark wrote: Thu Feb 07, 2019 10:15 pm
spdoublebass wrote: Thu Feb 07, 2019 10:03 pm
lostdog wrote: Thu Feb 07, 2019 9:49 pm
spdoublebass wrote: Thu Feb 07, 2019 9:46 pm
lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
lostdog
Do you have any tilts? (Small cap, reit, etc) or are you strictly global market cap?

Just curious.
Strictly global market cap.
Thanks.
It makes the most sense.

I’m always tempted to add REITs, but never have. Seems like once you tilt something it’s contagious and everything starts to look good. Ha
Yeah this investing philosophy falls over when you get to bonds though. How many bonds relative to stocks? Hunches and personal feelings, otherwise you'd be like 90% bonds because there is way more money in bonds than in stocks in the world. Which bond funds? The indices are kind of incomplete and bogus and the active funds don't underperform.

What about William Sharpe’s work?
I want to retire at global market weight. Right now about 56/44 stock to bond. I still have a long way to go so I’ll glide into that but that’s where I want to end.
I have no problem with international bonds.
I'm trying to think, but nothing happens
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bluquark
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by bluquark »

spdoublebass wrote: Thu Feb 07, 2019 10:20 pm What about William Sharpe’s work?
I want to retire at global market weight. Right now about 56/44 stock to bond. I still have a long way to go so I’ll glide into that but that’s where I want to end.
I have no problem with international bonds.
He says there’s a big spectrum of efficient portfolios but doesn’t offer much in the way of specifics about what they look like, except to note that the market cap portfolio is definitely one of the efficient portfolios, so it’s a safe default. But again, nobody wants a 90% bond 10% stock portfolio even if the Sharpe ratio is great because you can’t eat Sharpe ratio. So you have to tilt out of bonds and assume that tilted portfolio is also on the efficient plateau, just as factor investors assume their tilt remains efficient.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by Slow FIRE »

lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us.
Would it be fair to say that world market cap is also a bet? You are betting that world market cap will outperform.
Investing is a marathon, not a sprint.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by yogesh »

Now Fidelity’s turn:
Fidelity Zero Total World Index Fund (ER 0%)
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by Mountain Doc »

Slow FIRE wrote: Thu Feb 07, 2019 10:58 pm Would it be fair to say that world market cap is also a bet? You are betting that world market cap will outperform.
Diversification is not a bet on outperformance. In fact, you can virtually guarantee that a diversified portfolio (like VTWAX) will not be the best performer. Instead, diversification is about reducing the risk of severe underperformance.

I am confident that either US or international will outperform VTWAX in the future. I'm just not sure which one.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by lostdog »

Mountain Doc wrote: Thu Feb 07, 2019 11:14 pm
Slow FIRE wrote: Thu Feb 07, 2019 10:58 pm Would it be fair to say that world market cap is also a bet? You are betting that world market cap will outperform.
Diversification is not a bet on outperformance. In fact, you can virtually guarantee that a diversified portfolio (like VTWAX) will not be the best performer. Instead, diversification is about reducing the risk of severe underperformance.

I am confident that either US or international will outperform VTWAX in the future. I'm just not sure which one.
VTWAX/VT is the final destination for simplicity and investing enlightment.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by ruralavalon »

lostdog wrote: Thu Feb 07, 2019 9:41 pm Anything outside of world market cap is a bet and you're also saying you know more that the rest of us. I don't invest based on ideology, recency bias, political views, opinions, personal feelings, arm chair experts and hunches.
World market cap is a bet that the Effecient Market Hypothesis is absolutely correct. I don't invest based on faith in a theory. It's called a "hypothesis" for a reason.
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Re: Opinion on VTWAX

Post by Valuethinker »

lostdog wrote: Thu Feb 07, 2019 10:59 am
michaeljmroger wrote: Thu Feb 07, 2019 10:52 am I only see three potential reasons why someone wouldn't want to use VTWAX:

1. It makes TLH more difficult.
2. You have a strong opinion on having a different allocation for US/International.
3. Your portfolio is so large that the small ER difference bothers you.

None of these reasons outweighs the benefit of having a single stock fund in my opinion. Simplicity is key!
+1

Are you a global market cap investor?

Are you easily swayed by people claiming the U.S. is superior therefore they have 0% international? There are others that hold a fixed international allocation. Are you easily swayed by recency bias, political views and ideologies against countries outside the U.S? Do you like to slice and dice? Many other factors...

Do you value simplicity? Do you invest with logic and no emotion? Than VTWAX is your fund.

https://www.youtube.com/watch?v=LwTHLtuToSY
Valid reasons for an American to not invest full market weight in international stocks (assuming Efficient Market Hypothesis holds):

- lower costs
- additional volatility of international markets especially if currency unhedged
- possible dividend withholding tax issues (don't know about those)
- (Nisiprius analysis : in the long run it hasn't made much difference)

Reasons that do not make sense in an EMH framework:

- US has always done better in the past (that is recency bias writ large)
- there are some desirable characteristics of US market re corporate governance, orientation to shareholder value etc. - and this has not, somehow, been reflected in the relative valuations of markets despite being publicly available information

One has to shrug at this point and look at the historic data, which says that a US investor got the best risk-return tradeoff with between 20 and 30% in international stocks -- currency unhedged.

For an investor in any other country there does not seem to be a good reason for Home Country Bias. Except perhaps tax treatments. Assuming access to low cost ETFs or international index funds.

A related consideration is currency hedging. You can certainly hold the world index hedged back into your home currency. I don't have a good feel for the actual cost of that hedging to performance.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by Valuethinker »

spdoublebass wrote: Thu Feb 07, 2019 10:20 pm
bluquark wrote: Thu Feb 07, 2019 10:15 pm
spdoublebass wrote: Thu Feb 07, 2019 10:03 pm
lostdog wrote: Thu Feb 07, 2019 9:49 pm
spdoublebass wrote: Thu Feb 07, 2019 9:46 pm

lostdog
Do you have any tilts? (Small cap, reit, etc) or are you strictly global market cap?

Just curious.
Strictly global market cap.
Thanks.
It makes the most sense.

I’m always tempted to add REITs, but never have. Seems like once you tilt something it’s contagious and everything starts to look good. Ha
Yeah this investing philosophy falls over when you get to bonds though. How many bonds relative to stocks? Hunches and personal feelings, otherwise you'd be like 90% bonds because there is way more money in bonds than in stocks in the world. Which bond funds? The indices are kind of incomplete and bogus and the active funds don't underperform.

What about William Sharpe’s work?
I want to retire at global market weight. Right now about 56/44 stock to bond. I still have a long way to go so I’ll glide into that but that’s where I want to end.
I have no problem with international bonds.
If you are an American and you hold currency hedged international bonds, what you are basically diversifying over is credit risk (and a bit of liquidity risk). Given that some major bond markets such as the Italian government bond market (the world's 4th largest, I believe I read) have actual, real, credit risk that you can see in the yield spread (Italian government bonds yield 250 bps (2.5%) over their equivalent, implying the market believes that there is about a 2.5% p.a. higher chance of Italian default than Germany default*.

* complicated by what is the likely recovery for the bonds in the event of an Italian default, but conversely also there might be an illiquidity premium there driving Italian yields higher (my guess is that that is small). And then the imponderable about the effect of the European Central Bank QE fund buying Italian govt bonds.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by spdoublebass »

Valuethinker wrote: Fri Feb 08, 2019 10:09 am
If you are an American and you hold currency hedged international bonds, what you are basically diversifying over is credit risk (and a bit of liquidity risk).
I agree.

To be honest, I didn’t disclose everything in my above comment to lostdog. I do tilt away from global market cap. I hold extra TSM. Based mostly on Siamond study about tilting to your own country.

As for bonds, I hold so little now as I’m in the accumulation stage, it really doesn’t matter.
However, take last year for example, The total return for BNDX was greater than BND, it has been for the last few years. Not that that changes your point about currency hedging. My point is only I hold so few bonds I like having options for rebalancing.

My end goal of global market weight may still have my TSM tilt. I have time to figure it out.

I only asked lostdog because I was curious. Speaking only for myself, Im ok having some home country bias.
I'm trying to think, but nothing happens
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TheTimeLord
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Re: Opinion on VTWAX

Post by TheTimeLord »

lostdog wrote: Thu Feb 07, 2019 10:59 am
michaeljmroger wrote: Thu Feb 07, 2019 10:52 am I only see three potential reasons why someone wouldn't want to use VTWAX:

1. It makes TLH more difficult.
2. You have a strong opinion on having a different allocation for US/International.
3. Your portfolio is so large that the small ER difference bothers you.

None of these reasons outweighs the benefit of having a single stock fund in my opinion. Simplicity is key!
+1

Are you a global market cap investor?

Are you easily swayed by people claiming the U.S. is superior therefore they have 0% international? There are others that hold a fixed international allocation. Are you easily swayed by recency bias, political views and ideologies against countries outside the U.S? Do you like to slice and dice? Many other factors...

Do you value simplicity? Do you invest with logic and no emotion? Than VTWAX is your fund.

https://www.youtube.com/watch?v=LwTHLtuToSY
Using VT/VTWAX is to me a very emotionally invested position in the belief all markets are equal with the same efficiencies, protections and transparencies. It also suggests the inability to distinguish which areas of the world have the best and worse long term prospects. There is even some suggestion of equivalent long term performance by all markets which then leads to the question why diversify away from say the U.S. or EU if long term their markets will all have the same returns. I find nothing wrong with using VT/VTWAX but to me I find no superiority in it either. Now if I could invest in World Market Cap on a given day and my investments would never be rebalanced between markets letting the global winners run and the global losers shrink that would be a global market cap strategy that would appeal to me.
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Re: Opinion on VTWAX

Post by Vulcan »

TheTimeLord wrote: Fri Feb 08, 2019 10:29 am Using VT/VTWAX is to me a very emotionally invested position in the belief all markets are equal with the same efficiencies, protections and transparencies. It also suggests the inability to distinguish which areas of the world have the best and worse long term prospects. There is even some suggestion of equivalent long term performance by all markets which then leads to the question why diversify away from say the U.S. or EU if long term their markets will all have the same returns. I find nothing wrong with using VT/VTWAX but to me I find no superiority in it either. Now if I could invest in World Market Cap on a given day and my investments would never be rebalanced between markets letting the global winners run and the global losers shrink that would be a global market cap strategy that would appeal to me.
That is precisely what investing in VT does, as opposed to holding fixed weights in VTI/VXUS.

And no, global market cap is not about knowing something about long term prospects. It is about admitting that you do not.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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TheTimeLord
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Re: Opinion on VTWAX

Post by TheTimeLord »

Vulcan wrote: Fri Feb 08, 2019 10:37 am
TheTimeLord wrote: Fri Feb 08, 2019 10:29 am Using VT/VTWAX is to me a very emotionally invested position in the belief all markets are equal with the same efficiencies, protections and transparencies. It also suggests the inability to distinguish which areas of the world have the best and worse long term prospects. There is even some suggestion of equivalent long term performance by all markets which then leads to the question why diversify away from say the U.S. or EU if long term their markets will all have the same returns. I find nothing wrong with using VT/VTWAX but to me I find no superiority in it either. Now if I could invest in World Market Cap on a given day and my investments would never be rebalanced between markets letting the global winners run and the global losers shrink that would be a global market cap strategy that would appeal to me.
That is precisely what investing in VT does, as opposed to holding fixed weights in VTI/VXUS.

And no, global market cap is not about knowing something about long term prospects. It is about admitting that you do not.
It doesn't quite because it adjusts to the ebbs and flows of the global markets rather on a periodic basis instead of dividing the dollars once and leaving them there regardless. Even downtrending markets have rallies and hope periodically. I would also say it is not about admitting you do not, it is about believing you can't which I do not agree with. While no one can see the future there are known factors that definitely indicated the likely outcomes. As for the advice to invest in the U.S. only it stems from 2 areas, one that is often discussed which is U.S. domiciled companies operating in foreign countries and thus befitting from growth in foreign economies and second and perhaps more important the superiority in liquidity, transparency, regulation and efficiency of the U.S. market to many markets across the globe. You can agree or ignore my beliefs, I am as fallible as anyone but I am personally comfortable with them.
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Re: Opinion on VTWAX

Post by Vulcan »

TheTimeLord wrote: Fri Feb 08, 2019 10:54 am
Vulcan wrote: Fri Feb 08, 2019 10:37 am
TheTimeLord wrote: Fri Feb 08, 2019 10:29 am Using VT/VTWAX is to me a very emotionally invested position in the belief all markets are equal with the same efficiencies, protections and transparencies. It also suggests the inability to distinguish which areas of the world have the best and worse long term prospects. There is even some suggestion of equivalent long term performance by all markets which then leads to the question why diversify away from say the U.S. or EU if long term their markets will all have the same returns. I find nothing wrong with using VT/VTWAX but to me I find no superiority in it either. Now if I could invest in World Market Cap on a given day and my investments would never be rebalanced between markets letting the global winners run and the global losers shrink that would be a global market cap strategy that would appeal to me.
That is precisely what investing in VT does, as opposed to holding fixed weights in VTI/VXUS.

And no, global market cap is not about knowing something about long term prospects. It is about admitting that you do not.
It doesn't quite because it adjusts to the ebbs and flows of the global markets rather on a periodic basis instead of dividing the dollars once and leaving them there regardless. Even downtrending markets have rallies and hope periodically.
It only "adjusts" inasmuch as the share prices fluctuate due to market forces. You own (roughly) the same number of Boeing and Airbus shares today in your VT investment you did a year ago, but their current value depends on the market.
I would also say it is not about admitting you do not, it is about believing you can't which I do not agree with. While no one can see the future there are known factors that definitely indicated the likely outcomes. As for the advice to invest in the U.S. only it stems from 2 areas, one that is often discussed which is U.S. domiciled companies operating in foreign countries and thus befitting from growth in foreign economies and second and perhaps more important the superiority in liquidity, transparency, regulation and efficiency of the U.S. market to many markets across the globe. You can agree or ignore my beliefs, I am as fallible as anyone but I am personally comfortable with them.
You believe you know better than the market.
I believe you don't;)
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by lostdog »

https://www.youtube.com/watch?v=LwTHLtuToSY

Once you accept that you can't beat the market and admitting you don't know anything, VTWAX is all you need.

I think Jack said it himself. "No-one knows nuthin"
Last edited by lostdog on Fri Feb 08, 2019 11:31 am, edited 1 time in total.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by Vulcan »

lostdog wrote: Fri Feb 08, 2019 11:04 am https://www.youtube.com/watch?v=LwTHLtuToSY

Once you accept that you can't beat the market and admitting you don't know anything, VTWAX is all you need.

I think Jack said it himself. "No one knows nuthin"
John Bogle: all you need to know about investing in three words
Nobody knows nuthin'
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: Opinion on VTWAX

Post by TheTimeLord »

Vulcan wrote: Fri Feb 08, 2019 11:00 am
TheTimeLord wrote: Fri Feb 08, 2019 10:54 am
Vulcan wrote: Fri Feb 08, 2019 10:37 am
TheTimeLord wrote: Fri Feb 08, 2019 10:29 am Using VT/VTWAX is to me a very emotionally invested position in the belief all markets are equal with the same efficiencies, protections and transparencies. It also suggests the inability to distinguish which areas of the world have the best and worse long term prospects. There is even some suggestion of equivalent long term performance by all markets which then leads to the question why diversify away from say the U.S. or EU if long term their markets will all have the same returns. I find nothing wrong with using VT/VTWAX but to me I find no superiority in it either. Now if I could invest in World Market Cap on a given day and my investments would never be rebalanced between markets letting the global winners run and the global losers shrink that would be a global market cap strategy that would appeal to me.
That is precisely what investing in VT does, as opposed to holding fixed weights in VTI/VXUS.

And no, global market cap is not about knowing something about long term prospects. It is about admitting that you do not.
It doesn't quite because it adjusts to the ebbs and flows of the global markets rather on a periodic basis instead of dividing the dollars once and leaving them there regardless. Even downtrending markets have rallies and hope periodically.
It only "adjusts" inasmuch as the share prices fluctuate due to market forces. You own (roughly) the same number of Boeing and Airbus shares today in your VT investment you did a year ago, but their current value depends on the market.
I would also say it is not about admitting you do not, it is about believing you can't which I do not agree with. While no one can see the future there are known factors that definitely indicated the likely outcomes. As for the advice to invest in the U.S. only it stems from 2 areas, one that is often discussed which is U.S. domiciled companies operating in foreign countries and thus befitting from growth in foreign economies and second and perhaps more important the superiority in liquidity, transparency, regulation and efficiency of the U.S. market to many markets across the globe. You can agree or ignore my beliefs, I am as fallible as anyone but I am personally comfortable with them.
You believe you know better than the market.
I believe you don't;)
I believe when you start talking about individual markets (baskets of companies) and economies that there are known factors that give you insight into their probable future and if followed on a broad basis will lead to being correct more than being wrong. The will always be anomalies but I don't think we will find a lot of Wakandas out there and if we do then we can react to that find.
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Re: Opinion on VTWAX

Post by Vulcan »

TheTimeLord wrote: Fri Feb 08, 2019 11:33 am
Vulcan wrote: Fri Feb 08, 2019 11:00 am You believe you know better than the market.
I believe you don't;)
I believe when you start talking about individual markets (baskets of companies) and economies that there are known factors that give you insight into their probable future and if followed on a broad basis will lead to being correct more than being wrong. The will always be anomalies but I don't think we will find a lot of Wakandas out there and if we do then we can react to that find.
And you believe that this publicly available information is not already incorporated into public markets?
You believe that Airbus is less objectively valued than Boeing, and Toyota than GM?
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by TheTimeLord »

Vulcan wrote: Fri Feb 08, 2019 11:29 am
lostdog wrote: Fri Feb 08, 2019 11:04 am https://www.youtube.com/watch?v=LwTHLtuToSY

Once you accept that you can't beat the market and admitting you don't know anything, VTWAX is all you need.

I think Jack said it himself. "No one knows nuthin"
John Bogle: all you need to know about investing in three words
Nobody knows nuthin'
And yet in videos of hm at conferences he has said he did know or should have known about market extremes. He also issued cautionary comments about market returns over the next decade which would be odd if you thought you didn't know anything.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by ruralavalon »

You believe you know better than the market.
I believe you don't;)
It is indeed differences in opinion. The reason that there is so much debate is because there is no clear right answer.
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Re: Opinion on VTWAX [Vanguard Total World Stock]

Post by Vulcan »

TheTimeLord wrote: Fri Feb 08, 2019 11:37 am
Vulcan wrote: Fri Feb 08, 2019 11:29 am
lostdog wrote: Fri Feb 08, 2019 11:04 am https://www.youtube.com/watch?v=LwTHLtuToSY

Once you accept that you can't beat the market and admitting you don't know anything, VTWAX is all you need.

I think Jack said it himself. "No one knows nuthin"
John Bogle: all you need to know about investing in three words
Nobody knows nuthin'
And yet in videos of hm at conferences he has said he did know or should have known about market extremes. He also issued cautionary comments about market returns over the next decade which would be odd if you thought you didn't know anything.
I believe he explicitly cautioned against making investment decisions based on his cautionary comments.
"Don't do something, just stand there"
Well, stand everywhere :)
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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