User:LadyGeek/John Bogle's view on global investing

 represents the opinions of John C. Bogle on holding investments outside the US.

Overview
John Bogle held a view that, for American investors, it was not necessary to hold stocks domiciled outside the US. However, he conceded that there were valid reasons to hold international stock.

If one wished to hold international stock, then hold up to a maximum of 20% of your portfolio's stock asset allocation.

The content below shows the sources used to state this position.

Common Sense on Mutual Funds
Bogle provided an exposition of his view in Chapter 8, "On Global Investing," in Common Sense on Mutual Funds. Following these subheadings, he makes these points:


 * The chapter subtitle, "Acres of Diamonds," references "a classic essay by Dr. Russell Conwell, founder of Temple University." "The moral is clear and simple: stay home and dig in your own garden, instead of tempting fate in an alien world.... Here in the United States, we have, at least at the moment, the most productive economy, the greatest innovation, the most hospitable legal environment, and the finest capital markets on the planet."
 * "Overseas investments... are not essential, nor even necessary, to a well-diversified portfolio."
 * "For investors who disagree--and there are some valid reasons for global investing--I suggest limiting international investments to a maximum of 20 percent of a global equity portfolio.
 * The Global Portfolio Extreme: "Today's conventional wisdom suggests otherwise.... Some [academic theorists] recommend that the ideal equity portfolio should consist of holding of each nation's stocks at their world-market weight... more than half of the assets... for a US investor... would be placed outside the United States.... The other side of the story was well presented, in late 1997, by Wall Street Journal columnist Roger Lowenstein, who called it "Global-Investing bunk...."
 * Currency Risk and Returns: "In the very long run... foreign currency risk relative to the US dollar should be a neutral factor." Fluctuations create illusory impressions of periods of excess foreign returns. "Further complicating the matter, it is never clear whether these economic factors are accurately reflected in present market valuations. The race for superior market returns around the globe is never an easy one to call."
 * The Global Efficient Frontier: "[Some investors endorse an analysis that] involves the calculation of an efficient frontier, which is designed to [find] a combination that promises the highest return at the lowest ... volatility of return acceptable to the investor. I am skeptical of this approach as well, for the efficient frontier is based almost entirely on past returns and past risk patterns.... at the end of 1998, the optimum combination... would have called for 50 percent invested in foreign stocks and 50 percent in US stocks. How would it have worked out? Not particularly well....Another problem... is that extremely small variations in risk may separate the optimal portfolios from those deemed less efficient."
 * International Economies... tbd
 * The Record of Global Investors: the evidence from actual mutual funds investing globally "has not been inspiring."
 * Constructing Your Own Global Portfolio: tbd
 * Indexing in International Markets--A Better Way?: tbd
 * The Accidental Tourist: tbd
 * "Acres of Diamonds" Revisited: "You can lead a happy life without leaving home."

YouTube interview
On June 26, 2014, Scott Bondurant interviewed Vanguard Fund founder Jack Bogle for his Spring quarter History of Investing class for the Business Institutions Program at Northwestern University. The interview is posted on YouTube.

Mr. Bogle allows for opposing points of view. At the 5:47 timestamp, he states:

I don't see any problem with all US and I would guess that might even do a little better, although I don't know that, and, but if you want to put, if you feel the great urge to be with the modern trend, put up to 20% of your equities [in] international.

--John Bogle