John Bogle says investors don't need to own international stocks​

[Howard Donnelly]

"'Everyone tells me I'm wrong,' Mr. Bogle said. 'In my book, Bogle on Investing, I said, for a lot of reasons, you don't need to own international stock.' His argument: International investing involves extra risk, ranging from currency risk and economic risk to societal instability risk."

https://www.investmentnews.com/article/ ... nal-stocks

[TropikThunder]

OP, you’ve been on the board for 8 and a half years. Have you not seen any of the hundreds of Int’l threads saying the exact same thing? Why would you post this as if it was a revelation? Even your link is from 2 years ago.

[FIREchief]

I'm guessing it's been a week and we're just due for somebody to start another one of these threads. Everybody gets a turn!!

[TheEleven]

OP, you’ve been on the board for 8 and a half years. Have you not seen any of the hundreds of Int’l threads saying the exact same thing? Why would you post this as if it was a revelation? Even your link is from 2 years ago.

Any chance anyone could summarize in a quick sentence what the consensus is on this statement from Bogle for a brand new noob, please? Int'l stocks - Yep, or Nope?

[michaeljmroger]

Int'l stocks - Yep, or Nope?

Yep.

[nisiprius]

...Any chance anyone could summarize in a quick sentence what the consensus is on this statement from Bogle for a brand new noob, please? Int'l stocks - Yep, or Nope?

Many people in the forum will say "Bogle was wrong about that," but I don't think it reaches the level of "consensus." Another way to phrase it, keeping Bogle's actual words in mind, is that "most forum members want some international stocks."

I really think there's a consensus for wanting some international stocks, not zero.
I think there's even a consensus that less than 20% is not enough.
I think there's a consensus that more than global cap weight*, i.e. about 50%, is too much.

So, zero is wrong, <20% is wrong, >50% is wrong. But what's right? There is just no consensus about that. I think that forum opinion, like Vanguard's own allocations in its target-date funds, has slowly shifted upward over the last decade.

*Currently, in the total of the world's national stocks markets--there is no such thing as "the global stock market"--about 55% of the money is in US stocks, 45% in ex-US stocks. "Global cap weighting" means duplicating those percentages in your portfolio.

[bradinsky]

10% is just about perfect for us.

[Trader Joe]

"'Everyone tells me I'm wrong,' Mr. Bogle said. 'In my book, Bogle on Investing, I said, for a lot of reasons, you don't need to own international stock.' His argument: International investing involves extra risk, ranging from currency risk and economic risk to societal instability risk."

https://www.investmentnews.com/article/ ... nal-stocks

I 100% agree with John Bogle. A very wise man.

[McGilicutty]

I'll go against the consensus and recommend 0% international. International has been a horrible investment.

VXUS (Vanguard Total International) has been around since January 2011. $10,000 invested at inception is now worth a little under $14,000.

https://investor.vanguard.com/etf/profile/vxus

That's a return of about 4% per year for 8.5 years.

VOO (Vanguard S&P 500) has been around since September 2010. $10,000 invested at inception is now worth over $30,000.

https://investor.vanguard.com/etf/profile/VOO

That's a return of over 13% per year for 9 years.

International has been crushed by the S&P 500. I wouldn't touch international with a 10 foot pole.

[hagridshut]

I'll go against the consensus and recommend 0% international. International has been a horrible investment.

International has been crushed by the S&P 500. I wouldn't touch international with a 10 foot pole.

I'll also go against the consensus and recommend 0% S&P 500. The S&P has been a horrible investment.

FAANG has CRUSHED the S&P500.

https://www.fool.com/investing/2019/03/ ... -2019.aspx

Since 2013, the S&P has gained a paltry 86.94%.

In the same time frame:

FB: +458%
AAPL: + 173%
AMZN: +543%
NFLX: +1440%
GOOG: +209%

A basket of these stocks bought in equal amounts in 2013 would have yielded + 564%, totally destroying the S&P.

/s



Edit:

In all seriousness, nobody knows what the future will bring. A First Principle of Boglehead investing is to "buy the haystack" because nobody knows which portions of the haystack will win and lose in the future. The haystack is the global market. The U.S. markets have had a great 2009-2019, but 1999-2009 was dismal.

I am about 20% International. This has dragged down performance a bit, but my aim is a "good" return that gets me closer to my goals, not an "optimal" return. If I wanted optimal, I would have gone all-in on FAANG in 2012.

[stan1]

Any chance anyone could summarize in a quick sentence what the consensus is on this statement from Bogle for a brand new noob, please? Int'l stocks - Yep, or Nope?

Absolutely no way to do that. You get to make your own decision.

There are three groups:
A) 0% international
B) Market weight (about 55/45 domestic/intl)
C) Split (80/20, 75/25, or 66/34 are common)

I think the best justification is for C (split) but the hundreds of other threads will indicate there isn't a consensus. C captures the pros of A (market weight, can't predict future, diversification, own both Apple and Samsung, Ford and Toyota) with some of the arguments of C (US government is willing and able to create a unique opportunity for companies to thrive). Between 80/20, 75/25, or 66/34 I'd just pick the one in the middle.

Investors over 70 can probably assume the advantages of US markets Jack Bogle and Warren Buffet benefited greatly from over their careers leading US based companies will mostly persist for the rest of their lives. For younger investors the odds of that being so drop simply because of world demographics. As 2100 approaches and there are 4B people in Asia and 4B people in Africa it's pretty optimistic to assume they will be driven by the economics of 1B North Americans and Europeans.

[lostdog]

I'll go against the consensus and recommend 0% international. International has been a horrible investment.

VXUS (Vanguard Total International) has been around since January 2011. $10,000 invested at inception is now worth a little under $14,000.

https://investor.vanguard.com/etf/profile/vxus

That's a return of about 4% per year for 8.5 years.

VOO (Vanguard S&P 500) has been around since September 2010. $10,000 invested at inception is now worth over $30,000.

https://investor.vanguard.com/etf/profile/VOO

That's a return of over 13% per year for 9 years.

International has been crushed by the S&P 500. I wouldn't touch international with a 10 foot pole.

Cherry picking time frame. Even worse, cherry picking the ETF. You make it so obvious picking the worse time frame and inception date.

[hisdudeness]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

[ResearchMed]

Any chance anyone could summarize in a quick sentence what the consensus is on this statement from Bogle for a brand new noob, please? Int'l stocks - Yep, or Nope?

Absolutely no way to do that. You get to make your own decision.

There are three groups:
A) 0% domestic
B) Market weight (about 55/45 domestic/intl)
C) Split (80/20, 75/25, or 66/34 are common)

I think the best justification is for C (split) but the hundreds of other threads will indicate there isn't a consensus. C captures the pros of A (market weight, can't predict future, diversification, own both Apple and Samsung, Ford and Toyota) with some of the arguments of C (US government is willing and able to create a unique opportunity for companies to thrive). Between 80/20, 75/25, or 66/34 I'd just pick the one in the middle.

Investors over 70 can probably assume the advantages of US markets Jack Bogle and Warren Buffet benefited greatly from over their careers leading US based companies will mostly persist for the rest of their lives. For younger investors the odds of that being so drop simply because of world demographics. As 2100 approaches and there are 4B people in Asia and 4B people in Africa it's pretty optimistic to assume they will be driven by the economics of 1B North Americans and Europeans.

Do you have a typo, in the "A) 0% domestic"?
Did you mean "international" here?

If no typo, then surely, given the discussions, there should also be a "D) 0% international".
I've seen far more zero international comments than zero domestic.

However, there is obviously a continuum of opinions, with a middle ground of "market weighted" or similar.

RM

[stan1]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

We were ahead of you. Fair enough and succinctly stated. At least you are honest with yourself and aren't trying to come up with a smoke screen of other reasons such as saying the S&P 500 is actually a closet total world fund or seeking validation for your decision.

Let me ask this, though. Would you recommend all US to a grandchild in their 20s?

[stan1]

Do you have a typo, in the "A) 0% domestic"?
Did you mean "international" here?

Ooops! Corrected.

[lostdog]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

At least you're honest about it.

[cpumechanic]

My stocks are US only, mostly SP500 index at Vanguard or Fido with the very low yearly fees.

My recollection of his comments at the bogleheads convention I attended a few years ago is that that if you look at US companies, a significant portion of the income they receive is from outside the US.

So if Apple/Cisco/Google/Fakebook/Amazon get 10-20% of sales from outside the US... that is international enough for me.

I may be wrong, and it won't be the first time.. but that's my logic, and I sleep well at night.

God bless the US, and the free market we have and the hard working people who live here.

God Bless Jack Bogle and this forum and all here who reach out and help others learn the Boglehead way.

Sorry... just had to add that

Cheers all

CPU

PS... If some ultimate disaster strikes and wipes out the US stock market, and we are all in the backyard planting potatoes and carrots to survive the upcoming winter, I'm not sure having some significant portion of my assets in Europe or Asia will make me feel much better. So... I put all my bets on the US and let it ride.

[lostdog]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

We were ahead of you. Fair enough and succinctly stated. At least you are honest with yourself and aren't trying to come up with a smoke screen of other reasons such as saying the S&P 500 is actually a closet total world fund or seeking validation for your decision.

Let me ask this, though. Would you recommend all US to a grandchild in their 20s?

The whole reason I chime in most of the time is for novice investors to see other side. Well said and a very good question.

[Ferdinand2014]

"'Everyone tells me I'm wrong,' Mr. Bogle said. 'In my book, Bogle on Investing, I said, for a lot of reasons, you don't need to own international stock.' His argument: International investing involves extra risk, ranging from currency risk and economic risk to societal instability risk."

https://www.investmentnews.com/article/ ... nal-stocks

I 100% agree with John Bogle. A very wise man.

My super simple 2 fund IPS of cash enough to sleep at night and the S&P 500 keeps me from making behavioral mistakes of constantly fiddling with my allocation percent.

“The great strategy you can't stick with is obviously vastly inferior to the very good strategy you can stick with.” C. Asness

Carlson, Ben. A Wealth of Common Sense (Bloomberg) (p. 31). Wiley. Kindle Edition.

For me it's not even about U.S. vs International. It's about avoiding my past behavioral mistakes. A solution would be in all in one fund to take the decision out of my hands. My past behaviors have demonstrated my inability to be happy with the holdings, glide path or allocation. The closest is FFNOX (Fidelity four-in-one fund).

In past posts you have commented on holding EM and health care mutual funds. When and why did you change your mind?

Has anyone had the same problem I do? If so, how do you stick with your plan?

[hisdudeness]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

We were ahead of you. Fair enough and succinctly stated. At least you are honest with yourself and aren't trying to come up with a smoke screen of other reasons such as saying the S&P 500 is actually a closet total world fund or seeking validation for your decision.

Let me ask this, though. Would you recommend all US to a grandchild in their 20s?

At this point in time, I would absolutely recommend 100/0 (domestic/international) in equities to someone in their 20's. That's actually what I do with my teenage kids' UTMAs.

This does not have to be a permanent split, however. When international stocks begin to perform better, I'd ease them into the mix. I doubt that international outperformance (or domestic underperformance) will happen overnight.

Maybe this is performance chasing, but so be it.
The way I see it, if you let a dog in the house 10 times and every time he takes a dump on the rug, then he is likely to do the same on the 11th time.

[willthrill81]

The haystack is the global market.

1. Why?

2. Which global market? There are global markets for stocks, bonds, precious metals, electricity, commodities, art, etc.

[ImUrHuckleberry]

Not sure why anyone is pointing out recent returns as some kind of gotcha that 0 international is the correct decision. Seems to fly in the face of a basic tenet of bogleheadism.

[stan1]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

We were ahead of you. Fair enough and succinctly stated. At least you are honest with yourself and aren't trying to come up with a smoke screen of other reasons such as saying the S&P 500 is actually a closet total world fund or seeking validation for your decision.

Let me ask this, though. Would you recommend all US to a grandchild in their 20s?

At this point in time, I would absolutely recommend 100/0 (domestic/international) in equities to someone in their 20's. That's actually what I do with my teenage kids' UTMAs.

This does not have to be a permanent split, however. When international stocks begin to perform better, I'd ease them into the mix. I doubt that international outperformance (or domestic underperformance) will happen overnight.

Maybe this is performance chasing, but so be it.
The way I see it, if you let a dog in the house 10 times and every time he takes a dump on the rug, then he is likely to do the same on the 11th time.

Great, so you've thought through it and truthfully come to terms with your reasons: God Bless the USA and you are looking at past performance now but might change your mind in the future if you see something change. One of the best concise justifications on 100% domestic I've seen posted on here. Much better than "Jack Bogle said". I don't agree with it but you may turn out to be right.

[bondsr4me]

I agree 100% with Jack on this one.

[F150HD]

OP, you’ve been on the board for 8 and a half years. Have you not seen any of the hundreds of Int’l threads saying the exact same thing? Why would you post this as if it was a revelation? Even your link is from 2 years ago.

LOL

[JoMoney]

The typical justification for adding international has been "better portfolio diversification". The word "better" begs the question though, by what standard are you measuring it, or is it merely a subjective term and open to individual tastes and opinions? There's nothing wrong with people putting their money where they subjectively feel is "better". To the extent that markets work, it's necessary that people be open to freely exercising their preferences, regardless of how they rationalize it.
On more objective measures of "better diversification", the only measure I see where adding international has been "better" for U.S. investors, is it adds more stocks to the portfolio, more individual moving pieces... but despite portfolio theory, those additional stocks haven't improved the portfolio in a quantifiable way... at least not for a U.S. investor.
One argument that attempts to dispute the many rational reasons for having a "home country bias" (like taxes, cost, legal recourse, etc..) is explaining that portfolio theory for non-U.S. investors has worked out better. It has improved international portfolios to hold a larger allocation to U.S. stocks.
Some individuals on this board attempt to ridicule U.S. investors for not having international allocation, calling it "American Exceptionalism" (... I don't think they understand that term or it's origin..), ironically though it seems they're the ones advocating for non-U.S. investors to hold more of their assets in the U.S. Make of that what you will.
Another argument is that "if you don't know, diversify", these people express their inability to distinguish any discernible difference between buying a small-cap thinly traded "share" of a company in communist China vs a large-cap U.S. company. While I admit I don't know what the returns of any stock will be, take a look for yourself before passing on the challenge to your judgment about the risks involved.

"I've been right," Mr. Bogle said.
"Does that mean I'll be right in the future? I could be wrong," he said.
But, he added, when you buy the S&P 500, you buy a portfolio where roughly half the earnings and revenue comes from abroad.

[Whakamole]

One argument that attempts to dispute the many rational reasons for having a "home country bias" (like taxes, cost, legal recourse, etc..) is explaining that portfolio theory for non-U.S. investors has worked out better. It has improved international portfolios to hold a larger allocation to U.S. stocks.
Some individuals on this board attempt to ridicule U.S. investors for not having international allocation, calling it "American Exceptionalism" (... I don't think they understand that term or it's origin..), ironically though it seems they're the ones advocating for non-U.S. investors to hold more of their assets in the U.S. Make of that what you will.

How is that ironic?

If the "own the haystack" crowd believes that investors should own global stocks, that would include US investors owning non-US stock, Canadian investors owning non-Canadian stocks, etc.

Believing that owning foreign stock adds fees, currency risk, taxation issues, etc. which is a reason for US investors to avoid foreign funds, but non-US investors should still invest in the US - that would seem to fit the definition of irony a bit better, IMHO.

[petulant]

The typical justification for adding international has been "better portfolio diversification". The word "better" begs the question though, by what standard are you measuring it, or is it merely a subjective term and open to individual tastes and opinions? There's nothing wrong with people putting their money where they subjectively feel is "better". To the extent that markets work, it's necessary that people be open to freely exercising their preferences, regardless of how they rationalize it.
On more objective measures of "better diversification", the only measure I see where adding international has been "better" for U.S. investors, is it adds more stocks to the portfolio, more individual moving pieces... but despite portfolio theory, those additional stocks haven't improved the portfolio in a quantifiable way... at least not for a U.S. investor.
One argument that attempts to dispute the many rational reasons for having a "home country bias" (like taxes, cost, legal recourse, etc..) is explaining that portfolio theory for non-U.S. investors has worked out better. It has improved international portfolios to hold a larger allocation to U.S. stocks.
Some individuals on this board attempt to ridicule U.S. investors for not having international allocation, calling it "American Exceptionalism" (... I don't think they understand that term or it's origin..), ironically though it seems they're the ones advocating for non-U.S. investors to hold more of their assets in the U.S. Make of that what you will.
Another argument is that "if you don't know, diversify", these people express their inability to distinguish any discernible difference between buying a small-cap thinly traded "share" of a company in communist China vs a large-cap U.S. company. While I admit I don't know what the returns of any stock will be, take a look for yourself before passing on the challenge to your judgment about the risks involved.

"I've been right," Mr. Bogle said.
"Does that mean I'll be right in the future? I could be wrong," he said.
But, he added, when you buy the S&P 500, you buy a portfolio where roughly half the earnings and revenue comes from abroad.

Due to the benefits of diversification, I think we should also be looking at sizeable allocations to high-yield B-rated corporate bonds, negative-return euro sovereign bonds, wheat futures, and long-dated put spreads.

[ReformedSpender]

Here we go again...perpetual recency bias imo

International has outperformed before and it WILL outperform again.

Let me ask this, though. Would you recommend all US to a grandchild in their 20s?

Diversify, diversify, diversify

[Yohanson]

I was looking for a newer, more detailed explanation from Jack Bogle about why not to invest in international but I did find this:
https://www.youtube.com/watch?v=hvgptl5-Kcc

[hagridshut]

The haystack is the global market.

1. Why?

Because the global market encompasses all stocks, regardless of winners and losers. All stocks worldwide = total haystack of all stocks available.

2. Which global market? There are global markets for stocks, bonds, precious metals, electricity, commodities, art, etc.

The OP asked about international stocks, so I am referring to the global stock market.

[JoMoney]

...
Believing that owning foreign stock adds fees, currency risk, taxation issues, etc. which is a reason for US investors to avoid foreign funds, but non-US investors should still invest in the US - that would seem to fit the definition of irony a bit better, IMHO.

I think those are good reasons for anyone anywhere to have a "home-country bias", and if you look at how people (globally) allocate their stocks, by and large it's much less than "global market weights". So if someone was holding the portfolio of an average individual, vs the average of everyone (that doesn't represent any individual) they would have a "home-country bias".

[nisiprius]

I looked at a 60/40 model portfolio that was published in print in 1998 by a respected advocate of factor-based and international investing. As published the model portfolio described each holdings in a generic way, but each has an obvious Dimensional Fund Advisors fund corresponding to the description, and that's what I used.

The portfolio calls for 15% international, i.e. 25% of the whole stock allocation, and it's divided 10% "international" and 5% "emerging markets," thus a strong EM overweight.

The time period 1998-present is interesting. I didn't pick it, and the author didn't pick it to illustrate a point. It's real results, not backtesting, going forward from time of publication, and it's "out of sample." It includes both a time period, 2002-2008, during which international strongly outperformed US, as well as the recent period when the US outperformed international, so it wasn't cherry-picked, and 1998 isn't ridiculously recent. The fact that it includes periods of both outperformance and underperformance means that there was some diversification effect, which had a chance to prove its value.

Portfolio 1, 25%-of-stocks international is "as published in 1998."
Portfolio 2, US-only is Portfolio 1 with international stocks removed and the rest adjusted to the same relative proportions as before.

Source



I'll let the chart speak for itself.

Although 25%-of-stocks-international is what this writer was on record as recommending in 1998, international advocates often recommend more now. So just in case portfolio 1 didn't have "enough" international in it, we'll try again, this time comparing 50%-of-stocks-international with US-only.

Portfolio 1, 50%-of-stocks international is the 1998 portfolio with international stocks doubled, and US stocks cut back to 2/3rds of the published values, to create equal US and international allocations.
Portfolio 2, US-only is, again, the 1998 portfolio with international stocks removed and the rest adjusted to the same relative proportions as before.

Source

[JoMoney]

...
Due to the benefits of diversification, I think we should also be looking at sizeable allocations to high-yield B-rated corporate bonds, negative-return euro sovereign bonds, wheat futures, and long-dated put spreads.

My first reaction was sounds about right for a portfolio alchemist.. but on second thought, I'm thinking Poe's Law applies here...

[Whakamole]

...
Believing that owning foreign stock adds fees, currency risk, taxation issues, etc. which is a reason for US investors to avoid foreign funds, but non-US investors should still invest in the US - that would seem to fit the definition of irony a bit better, IMHO.

I think those are good reasons for anyone anywhere to have a "home-country bias", and if you look at how people (globally) allocate their stocks, by and large it's much less than "global market weights". So if someone was holding the portfolio of an average individual, vs the average of everyone (that doesn't represent any individual) they would have a "home-country bias".

Yet you claimed that encouraging US investors to invest in foreign stocks, and encouraging non-US investors to invest in US stocks, was irony. Could you please explain how this advice is "ironic"?

[harvestbook]

God bless everybody. 100 percent global stock.

[SoonerD]

...Any chance anyone could summarize in a quick sentence what the consensus is on this statement from Bogle for a brand new noob, please? Int'l stocks - Yep, or Nope?

Many people in the forum will say "Bogle was wrong about that," but I don't think it reaches the level of "consensus." Another way to phrase it, keeping Bogle's actual words in mind, is that "most forum members want some international stocks."

I really think there's a consensus for wanting some international stocks, not zero.
I think there's even a consensus that less than 20% is not enough.
I think there's a consensus that more than global cap weight*, i.e. about 50%, is too much.

So, zero is wrong, <20% is wrong, >50% is wrong. But what's right? There is just no consensus about that. I think that forum opinion, like Vanguard's own allocations in its target-date funds, has slowly shifted upward over the last decade.

*Currently, in the total of the world's national stocks markets--there is no such thing as "the global stock market"--about 55% of the money is in US stocks, 45% in ex-US stocks. "Global cap weighting" means duplicating those percentages in your portfolio.

If you’re referring to the vocal members as the population then maybe you’re correct.

If you’re referring to the US inverstors as the population then I would guess the concensus is closer to 0 than 20 as a percentage of their actual portfolios in international equities.

[Valuethinker]

On this lazy Sunday morning, just waiting for the lost dog and that "don't you want to own Nestle and Samsung and Toyota" guy to chime in.
My OPINION is VTSAX and God Bless the USA.

We were ahead of you. Fair enough and succinctly stated. At least you are honest with yourself and aren't trying to come up with a smoke screen of other reasons such as saying the S&P 500 is actually a closet total world fund or seeking validation for your decision.

Let me ask this, though. Would you recommend all US to a grandchild in their 20s?

At this point in time, I would absolutely recommend 100/0 (domestic/international) in equities to someone in their 20's. That's actually what I do with my teenage kids' UTMAs.

This does not have to be a permanent split, however. When international stocks begin to perform better, I'd ease them into the mix. I doubt that international outperformance (or domestic underperformance) will happen overnight.

Maybe this is performance chasing, but so be it.
The way I see it, if you let a dog in the house 10 times and every time he takes a dump on the rug, then he is likely to do the same on the 11th time.

I am amazed you can forecast the turning point?

If international outperforms for a year, say, is that the turn? How about 2000 to 2008, was that the turn?

Or would you wait for say 30 years of outperformance to be the turn?

Because I face the opposite quandary whether to be full market weighted in USA. In fact I have been underweight, which has hurt a lot. Particularly in light of the strength of the USD against CAD GBP and EUR.

If I was a betting man I'd say UK market will underperform US market for a simple reason.

17 per cent of UK market index is oil and gas. Mostly BP and Royal Dutch Shell. There is a bit of coal in there too via the large weighting in mining stocks.

In the world we are fast moving into they will not be able to fully extract those reserves. Those companies are dead men walking. They may be around in 30 years time. But not in 50 in their current form. As the market comes to realize this their valuations will be increasingly depressed. Lower and lower PE ratios. Kind of like big tobacco (also a major component of FTSE index).

Sadly the same is true for the Canadian index (40% natural resources primarily oil and gas) and the Australian.

So I have a theory why UK Canada Australia will underperform (Australia actually has more metals mining companies which should do fine).

What I can't predict is if or when the market will come to share my view?

How will you know if USA is going to underperform?

[Valuethinker]

...Any chance anyone could summarize in a quick sentence what the consensus is on this statement from Bogle for a brand new noob, please? Int'l stocks - Yep, or Nope?

Many people in the forum will say "Bogle was wrong about that," but I don't think it reaches the level of "consensus." Another way to phrase it, keeping Bogle's actual words in mind, is that "most forum members want some international stocks."

I really think there's a consensus for wanting some international stocks, not zero.
I think there's even a consensus that less than 20% is not enough.
I think there's a consensus that more than global cap weight*, i.e. about 50%, is too much.

So, zero is wrong, <20% is wrong, >50% is wrong. But what's right? There is just no consensus about that. I think that forum opinion, like Vanguard's own allocations in its target-date funds, has slowly shifted upward over the last decade.

*Currently, in the total of the world's national stocks markets--there is no such thing as "the global stock market"--about 55% of the money is in US stocks, 45% in ex-US stocks. "Global cap weighting" means duplicating those percentages in your portfolio.

If you’re referring to the vocal members as the population then maybe you’re correct.

If you’re referring to the US inverstors as the population then I would guess the concensus is closer to 0 than 20 as a percentage of their actual portfolios in international equities.

We do know the retail market for funds performance chases, and churns.

So you'd need to separate out that as a factor to get a long term view.

Or perhaps look at US endowments and continuing defined benefit pension fund asset allocations as a benchmark.

That said the investor in aggregate is not so foolish if it's around 20 per cent because that would give a reasonable stab at minimizing volatility for a US based investor over the historic long run.

[JoMoney]

...
Believing that owning foreign stock adds fees, currency risk, taxation issues, etc. which is a reason for US investors to avoid foreign funds, but non-US investors should still invest in the US - that would seem to fit the definition of irony a bit better, IMHO.

I think those are good reasons for anyone anywhere to have a "home-country bias", and if you look at how people (globally) allocate their stocks, by and large it's much less than "global market weights". So if someone was holding the portfolio of an average individual, vs the average of everyone (that doesn't represent any individual) they would have a "home-country bias".

Yet you claimed that encouraging US investors to invest in foreign stocks, and encouraging non-US investors to invest in US stocks, was irony. Could you please explain how this advice is "ironic"?

That's not what I said. What I said was:

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Some individuals on this board attempt to ridicule U.S. investors for not having international allocation, calling it "American Exceptionalism" (... I don't think they understand that term or it's origin..), ironically though it seems they're the ones advocating for non-U.S. investors to hold more of their assets in the U.S. Make of that what you will.

The incongruity is displayed as (A) Ridiculing that there isn't anything exceptional about the U.S. market , along with, (B) Suggesting a portfolio that would put a larger weighting in U.S. stocks (for a non-U.S. investor)

[Whakamole]

That's not what I said. What I said was:

...
Some individuals on this board attempt to ridicule U.S. investors for not having international allocation, calling it "American Exceptionalism" (... I don't think they understand that term or it's origin..), ironically though it seems they're the ones advocating for non-U.S. investors to hold more of their assets in the U.S. Make of that what you will.

The incongruity is displayed as (A) Ridiculing that there isn't anything exceptional about the U.S. market , along with, (B) Suggesting a portfolio that would put a larger weighting in U.S. stocks (for a non-U.S. investor)

Can you provide a link to an example of someone encouraging overweighting in the US market?

Otherwise it seems like encouraging a global weighting or something close to it (which is close to what Vanguard uses in VT/BNDW, as well as the Target Retirement and LifeStrategy funds) for all investors regardless of residence doesn't seem ironic at all. It seems consistent with the belief of weighting based on market cap.

Indeed, it seems like ridiculing US investors for having international allocation at all, giving statistics about how US companies still make money overseas, that non-US markets as a whole have underperformed recently, etc. would seem to implicitly encourage non-US investors to overweight the US, even though at the same time investing in a foreign (to the investor) market increases cost and risk.

[LadyGeek]

This thread has run its course and is locked (not actionable as stated by the OP, much more contentious than the "usual" non-US vs. US equity allocation disagreements). See: Locked Topics

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