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Old 11-08-2017, 02:14 AM   #21
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The correlation between US stocks and Int stocks is about 0.77 so it doesn't add much diversity, but it does add considerable volatility. If you want some more diversity add 2-5% GLD to a 60:40 stock bond portfolio. Bonds are .07 correlated and gld is -.04
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Old 11-08-2017, 03:25 AM   #22
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I am increasing exposure to international developed markets because the stocks are cheaper presently. Also, central banks outside the US are still pursuing stimulative policies, unlike the US.

Also increasing exposure to emerging markets. More value.

Over time, returns run in cycles. US markets have had a long run.
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Old 11-08-2017, 04:49 AM   #23
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My biggest issue with adding international stocks is I wouldn't know what area of the World to invest in. I do not know enough about overseas markets to risk any significant money there. This doesn't mean it's a bad idea if one does so. It could turn out to be wonderful.

I do have a little international exposure in my big bond fund that invests all around the World. There's not a one size fits all that any one can come up with I don't think. I feel most comfortable staying in the U.S. That doesn't mean it's the only way to go, but it's what I personally feel comfortable with.
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Old 11-08-2017, 05:40 AM   #24
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Also if purchasing emerging markets and even developed European to a lesser extent recommend managed rather than passive as the manager can legally get “tips” which in the US maybe considered insider trading


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I think many foreign countries operate on corruption and bribes. Legal or not.

I do not own too much international funds or ETFs. 20% in my 401K and none in my after tax and Roth. Maybe 5-10% max of the total.

I am not too worried about the volatility of the US markets (for now).
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Old 11-08-2017, 06:55 AM   #25
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Well, based upon the sage guidance and ideas provided, I am going to add a small slice of international in the near future. I'll plan to share my results about this time next year.

Thanks to all!
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Old 11-08-2017, 07:58 AM   #26
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Go over to bogleheads.org and do a search on this subject. It is raised and debated often.

33% of our equities are ex-US.
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Old 11-08-2017, 08:16 AM   #27
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Go over to bogleheads.org and do a search on this subject. It is raised and debated often.

33% of our equities are ex-US.

Neither Buffet or Bogle are warm on International equities.

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Investment legends Jack Bogle and Warren Buffet have a few things in common: They embrace low fees and index investing, and millions of people look to them for investing wisdom. One other thing: When it comes to investing, both are homebodies.

Bogle dismisses international diversification. Buffett, meanwhile, says an index fund portfolio of 90 percent S&P 500 and 10 percent Treasurys is probably good enough for most investors — that's how he is recommending his wife invest. But the anti-international stance is the rare piece of investment advice over which many people dare to disagree with Bogle and Buffett.

https://www.cnbc.com/2017/04/17/a-st...n-buffett.html
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Old 11-08-2017, 08:25 AM   #28
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Neither Buffet or Bogle are warm on International equities.
Buffet? Berkshire Hathaway has investments in foreign stocks, and also direct ownership of foreign companies. Do you have a link to any comment Warren Buffet has made that discourages investment in int'l equities?
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Old 11-08-2017, 08:45 AM   #29
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My biggest issue with adding international stocks is I wouldn't know what area of the World to invest in. I do not know enough about overseas markets to risk any significant money there. This doesn't mean it's a bad idea if one does so. It could turn out to be wonderful.
Just buy an index fund that encompasses the rest of the world, then you don't have to know anything.

I have 1/3 of my stock in international. It's always felt right for me. But the decision of how much to allocate to stocks vs bonds is much more important than how to divvy up the stocks.
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Old 11-08-2017, 08:53 AM   #30
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There are several on google that are on both sides of the passive vs active for undeveloped xUS and Emerging Markets. Need to investigate for your self but the political etc... unknowns are sometimes better with active or better yet avoid those countries.

Not recommending this fund but first one I found via google... “To win in emerging markets,avoid the passive investing rush” Bloomberg
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Old 11-08-2017, 08:53 AM   #31
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I think many foreign countries operate on corruption and bribes. Legal or not. ..
@Senator, it seems that you frequently make jingoistic comments like this. I don't know if you're just trolling for fun or if you are serious.

Re corruption, the US is ranked eighteenth from the best, beat by most of the EU, by Hong Kong, Australia, and Singapore among others. My guess is that on a cap-weighted basis the US is about average for the pack. Certainly you should not be feeling particularly holy about the US. https://www.transparency.org/news/fe...ons_index_2016

Maybe you don't travel?

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My biggest issue with adding international stocks is I wouldn't know what area of the World to invest in. ...
@UnrealizedPotential you're missing a very important point here: Nobody else knows either.

Trying to pick countries, regions, or sectors is likely to be a losing proposition and is really not that far from stock picking, which is a statistically proven loser. The funds many of us have mentioned in this threads are passive funds that simply buy everything. To the degree that we can know anything, we know that the long term trend of stocks is upwards. We don't know how fast, we do know that there will be reversals along the way, but we also know that buying the market means that there are literally hundreds of millions of people working hard to make money for us, the stockholders. So we simply ride the wave.

A Bogleism that I think has already been mentioned: "Don't do something, just sit there!" A Buffetism is similar: "The market is a mechanism for transferring money from the impatient to the patient."
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Old 11-08-2017, 08:56 AM   #32
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The correlation between US stocks and Int stocks is about 0.77 so it doesn't add much diversity, but it does add considerable volatility. If you want some more diversity add 2-5% GLD to a 60:40 stock bond portfolio. Bonds are .07 correlated and gld is -.04
The data suggests otherwise.... the volatility of a 100% US stocks portfolio and a 70/30 US stocks/international stocks portfolio are quite similar. For example, for 1997 to 2017 YTD, the standard deviations were 15.42% for a 100% US stock portfolio (VITSX) and 15.54% for a 70/30 US/international portfolio (VITSX/VGTSX).... rebalanced annually.

See https://www.portfoliovisualizer.com/...nalysisResults
to test different periods of time or different allocations.
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Old 11-08-2017, 08:57 AM   #33
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Buffet? Berkshire Hathaway has investments in foreign stocks, and also direct ownership of foreign companies. Do you have a link to any comment Warren Buffet has made that discourages investment in int'l equities?

I included a link in the post above. Berkshire invests in many things, including international companies. Buffet does not even recommend individuals buy Berkshire Hathaway.

https://www.cnbc.com/2017/04/17/a-st...n-buffett.html

I have never seen Warren give an individual investor advice to buy international equities.
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Old 11-08-2017, 09:05 AM   #34
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I included a link in the post above. Berkshire invests in many things, including international companies. Buffet does not even recommend individuals buy Berkshire Hathaway.

https://www.cnbc.com/2017/04/17/a-st...n-buffett.html

I have never seen Warren give an individual investor advice to buy international equities.
I wonder if it might be a do as I say vs say what I do thing since Berkshire does have a lot of international investments and operations.

While I prefer a significant allocation to international stocks, from the data that I have seen it doesn't seem to make a drastic diffference either way.
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Old 11-08-2017, 09:10 AM   #35
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@Senator, it seems that you frequently make jingoistic comments like this. I don't know if you're just trolling for fun or if you are serious.

Re corruption, the US is ranked eighteenth from the best, beat by most of the EU, by Hong Kong, Australia, and Singapore among others. My guess is that on a cap-weighted basis the US is about average for the pack. Certainly you should not be feeling particularly holy about the US. https://www.transparency.org/news/fe...ons_index_2016

Maybe you don't travel?
I know many people, from many international countries and many have stories about bribery. Especially Mexico.

My own mother had a green card from Mexico, so she could live there, and she had someone else use their thumbprints so she would not have to go to the office to do it herself.

Many friends from India, Iran, Pakistan, China etc. have similar stories. Probably European countries, and Japan, are better than others.

The USA is no saint, but it is the most trusted country when it come to finances. Hence it is the world's reserve currency. It also leads in returns when compared to other international investing options.
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Old 11-08-2017, 09:12 AM   #36
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I wonder if it might be a do as I say vs say what I do thing since Berkshire does have a lot of international investments and operations.

While I prefer a significant allocation to international stocks, from the data that I have seen it doesn't seem to make a drastic difference either way.
Exactly. And it is far easier to manage a S&P ETF than reallocate and pay taxes every year strictly due to re-balancing.
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Old 11-08-2017, 09:16 AM   #37
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..... And it is far easier to manage a S&P ETF than reallocate and pay taxes every year strictly due to re-balancing.
Not really... I don't see having both domesitc and international equities making rebalancing any more difficult than if I had just domestic equities.
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Old 11-08-2017, 10:10 AM   #38
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I know many people, from many international countries and many have stories about bribery. Especially Mexico.

My own mother had a green card from Mexico, so she could live there, and she had someone else use their thumbprints so she would not have to go to the office to do it herself.

Many friends from India, Iran, Pakistan, China etc. have similar stories. Probably European countries, and Japan, are better than others.
The plural of "anecdote" is not "data." I gave you a link to the data.

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The USA is no saint, but it is the most trusted country when it come to finances. ...
You're entitled to your own opinions of course but you are not entitled to your own facts. Can you back that statement up? Clearly the corruption index implies that your statement is false.

The reasons that the dollar is currently the world's reserve currency are complex and somewhat rooted in history, but "trust" is only one of them and probably not the primary one. We are basically the tallest midget; the dollar has issues but the alternatives are, at this time, worse. That will change and much of the world is rooting for sooner rather than later.
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Old 11-08-2017, 10:31 AM   #39
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...We are basically the tallest midget; the dollar has issues but the alternatives are, at this time, worse. ...
A more app description might be that we are the best looking horse in the glue factory.
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Old 11-14-2017, 09:30 AM   #40
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I think some posters in this thread are mixing up 'international' with 'emerging markets'. There is a difference between Switzerland and Zimbabwe, though.

Regarding the OP's question, why would anyone put 100% of their equity allocation in just one country? Even if it's the world's most important economy? I wouldn't be comfortable with the political risks. Yes, it went exceptionally well for the last few hundred years, but past performance is not indicative of future results, as we all know.

The MSCI World has 59% US holdings (link, p. 2). So anything <41% international is basically a sector bet, and that does not even take emerging markets into account.

For my own portfolio, I use a combination of ETFs tracking
a) the developed world (MSCI World)
b) emerging markets (MSCI EM)
c) my home currency region (Eurostoxx600)

c) is probably unnecessary, as MSCI World and Eurostoxx600 are heavily correlated. But I prefer to be overweighted in equities denominated in €.

@OldShooter: 'The plural of "anecdote" is not "data"' absolutely made my day.
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