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Old 07-19-2016, 09:43 PM   #21
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http://3p5bnx3przb73659la2iupn2.wpen...-id2129474.pdf

Above may be a little off topic, in that it deals with historical returns given CAPE values, but I think his point is, if you have a choice to invest in a highly valued market, or a lowly valued one, why constrain yourself to just one?

Faber has other research on "home country bias". Below is a link he had to a Credit Suisse report.

http://publications.credit-suisse.co...1FF70FAF7A4A65

Starting on page 32, I think, you can look up returns for about any country you like.
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Old 07-19-2016, 10:15 PM   #22
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Quote:
Originally Posted by gcgang View Post
http://3p5bnx3przb73659la2iupn2.wpen...-id2129474.pdf

Above may be a little off topic, in that it deals with historical returns given CAPE values, but I think his point is, if you have a choice to invest in a highly valued market, or a lowly valued one, why constrain yourself to just one?

Faber has other research on "home country bias". Below is a link he had to a Credit Suisse report.

http://publications.credit-suisse.co...1FF70FAF7A4A65

Starting on page 32, I think, you can look up returns for about ant country you like.
Interesting read. BTW, the current US CAPE value is 26.92.

Shiller PE Ratio
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Old 07-20-2016, 07:01 AM   #23
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I cap international equity (including EM) at no more than 25% of my total allocation to equities.
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Old 07-20-2016, 08:26 AM   #24
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Vanguard just posted this article yesterday

Global stock investing: Broadening the borders of your portfolio

https://personal.vanguard.com/us/ins...RSS&Channel=AN
The key word in this whole article is "historically".... blah, blah, blah. My premise is that analysts are meaning going back 50-60-70 years when they say "historically". The world has dramatically gotten smaller in the last 20 years ... meaning most large companies are operating globally now, and they weren't 50 years ago. Many US based companies get the majority of their sales from outside the US. Take the 2008 banking crisis in the US... the worlds markets all kind of reacted similarly. So the historical look is not really the best way to approach this.

I have no finance background and could be completely off the wall in my thinking, but I've just pulled out of international funds and will stick with my new plan and see how it does. Ironically I used the Fidelity retirement planner and its recommending I move 20% back into international to have the right balance. Their projection if I do that is less accumulated wealth over the long haul, but I guess supposedly less volatile? I don't buy it. I don't freak out if the market takes a big dip and just ride it out. I think the world is so connected right now that a big problem in any of the major markets is going to drag down the world markets.
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Old 07-20-2016, 10:48 AM   #25
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With so many people declaring that they are getting out of international, I am wondering if we are nearing the bottom ...
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Old 07-20-2016, 12:20 PM   #26
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Lots of very interesting replies, thanks.
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Old 07-20-2016, 09:50 PM   #27
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With so many people declaring that they are getting out of international, I am wondering if we are nearing the bottom ...

Well I hope that's true. But then the 'so many people' consists of a tiny slice of this one board. So hard to say how representative that would be of the investing public at large.
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Old 07-20-2016, 09:55 PM   #28
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Vanguard has done a great deal of research into this topic and those interested can find much more detailed papers on their site providing more detail. Truly neutral portfolios reflecting worldwide market realities (the complex slice-and-dice world of DFA and other MPT advocates) would have a long-term investor at a bit more than 50% in international - and not just in stocks but in bonds.

Have a look at Vanguard's own shifting allocations in their Target Retirement and Lifestyle Strategy funds over the past few years. In general they're now at about 30% of total bond allocation in hedged international and 40% of stocks in international index even in their most conservative funds (such as the Target Retirement Income Fund, which is 30% bonds: 70% stocks).

As others have pointed out outperformance in international vs. domestic tends to by cyclical. Schwab had a good recent piece on this:

Three Reasons Why Now is Not the Time to Retreat from Global Diversification
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Old 07-21-2016, 05:24 AM   #29
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Vanguard has done a great deal of research into this topic and those interested can find much more detailed papers on their site providing more detail. Truly neutral portfolios reflecting worldwide market realities (the complex slice-and-dice world of DFA and other MPT advocates) would have a long-term investor at a bit more than 50% in international - and not just in stocks but in bonds.

Have a look at Vanguard's own shifting allocations in their Target Retirement and Lifestyle Strategy funds over the past few years. In general they're now at about 30% of total bond allocation in hedged international and 40% of stocks in international index even in their most conservative funds (such as the Target Retirement Income Fund, which is 30% bonds: 70% stocks).

As others have pointed out outperformance in international vs. domestic tends to by cyclical. Schwab had a good recent piece on this:

Three Reasons Why Now is Not the Time to Retreat from Global Diversification
Persuasive. Thanks for that.
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Old 07-21-2016, 08:50 AM   #30
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In preparation for DW's anticipated long retirement (and my own of less predictable length), I've done a lot of research on this--partially sparked by Pfau's analysis of how few countries would have supported a 4, or even 3, percent withdrawal rate over the past 100 years. Have been moving more into international and greater diversification over the past couple of years as a result. Ultimate goal is 40-50% international for our equities.

This short article/post by Paul Merriman does a good job of summing up where I'm at while remaining approachable on one read. Six reasons you should invest internationally – Paul Merriman There are, of course, seemingly endless debates at bogleheads on this topic (and Merriman), if you want to waste a day or two!
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Old 07-21-2016, 08:55 AM   #31
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As others have pointed out outperformance in international vs. domestic tends to by cyclical. Schwab had a good recent piece on this:

Three Reasons Why Now is Not the Time to Retreat from Global Diversification

Great article. Valuations matter. That's why I'm keeping my (high) international allocation. No way I would allocate more to US equities right now. Sounds like recency bias to me.
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Old 07-21-2016, 12:08 PM   #32
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I'm at 30% of equities and 20% of bonds international, don't see any reason to switch with all the articles linked here. But I get most of my research from Vanguard and they are moving to higher percentages as posted above.
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Old 07-21-2016, 08:34 PM   #33
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I'm similar but 1/3 of allocation for each in international. I have overallocation in Asia and Emerging Markets but added to Europe a year ago and may add again. This is on the basis of a much higher valuation to US stocks; we'll see whether US delivers on that faith. Non-correlation holds up recently--international stocks have largely underperformed!


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I'm at 30% of equities and 20% of bonds international, don't see any reason to switch with all the articles linked here. But I get most of my research from Vanguard and they are moving to higher percentages as posted above.
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Old 07-22-2016, 01:14 AM   #34
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U.S. vs international stock performance depends on the decade...
1980s international
1990s U.S.
2000s international
2010-2015 U.S.

My goal is some stock performance in each decade (avoiding lost decades), so I keep a mix of both U.S. and international stock indexes.
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Old 07-22-2016, 10:45 AM   #35
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Great article. Valuations matter.
+1 Bingo!

In order to get the return one needs to pay for a descent retirement one must buy at prices that allow a healthy return over the years.
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Equities- Intl vs US?
Old 07-22-2016, 09:49 PM   #36
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Equities- Intl vs US?

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With so many people declaring that they are getting out of international, I am wondering if we are nearing the bottom ...
Seriously +1. This is all making me salivate.
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Old 07-22-2016, 11:23 PM   #37
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I am thinking about increasing my international allocation. The foreign markets look somewhat cheaper than the US market and the dollar has rallied quite a bit since 2009. I think it is time for us to divest away from the US. I will be slowly bumping my international allocation from 20% of equities to 40%, and from 0% of bonds to 20%.
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Old 07-23-2016, 03:33 PM   #38
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With so many people declaring that they are getting out of international, I am wondering if we are nearing the bottom ...

I don't know about others, but I got out several years ago. Int'l will still underperform unless their economic prospects are better than ours. That is what it is about.


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Old 07-23-2016, 03:44 PM   #39
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I have increased intl weight in equities from in the teens to near 30% even against the gains in the US. I've tilted my purchases the last year or so toward international due to valuations. While they're underperforming now, I don't expect that to continue in perpetuity and like the value in EAFE and VTIAX more than the S&P 500 or VTSAX at this point.
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Equities- Intl vs US?
Old 07-23-2016, 05:14 PM   #40
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Equities- Intl vs US?

For comparison in case interested, we are currently allocated 82/16/2 and, within that, we're 25% international stock and 4% international bonds, all indexed. I'm 50 and still w*rking 5 more long years, so am comfortable with the AA. YMMV.


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