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International Allocation
Old 01-06-2007, 08:52 PM   #1
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International Allocation

I'm perfecting our asset allocation and I have 20% of our total portfolio in international equities. We are 57 and almost 61, still working but slowing down. Is 20% too high?
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Re: International Allocation
Old 01-06-2007, 08:58 PM   #2
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Re: International Allocation

No, it's too low.
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Re: International Allocation
Old 01-06-2007, 09:02 PM   #3
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Re: International Allocation

I'd say 20% is about right...I'm in your age range, retired and at ~15%.

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Re: International Allocation
Old 01-06-2007, 09:58 PM   #4
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Re: International Allocation

I have 20% of the equities in my portfolio in international, but not 20% of total portfolio.
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Re: International Allocation
Old 01-06-2007, 10:09 PM   #5
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Re: International Allocation


We have around 27% of our overall portfolio in international equities.

Earlier in the week I rebalanced and trimmed around 2% off international. 25% would probably be better, but I don't want to take the tax hit. Anyhow, with a 28% allocation to US equities, our overall allocation is nearly market cap weighted (US has about half of world market cap).

I've had us tilted against the dollar for a while and it may be time to start unwinding it. Or maybe not, who knows?

Jim

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Re: International Allocation
Old 01-06-2007, 11:06 PM   #6
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Re: International Allocation

Vanguard recommends between 20-40% of your stocks in Int'l, so you should be in good shape. In my case it works out to 27% of my total portfolio and 40% of my stock allocation.

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Re: International Allocation
Old 01-06-2007, 11:28 PM   #7
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Re: International Allocation

Retired. About 40% of our equities are international as that segment of the protfolio has grown the most. After evaluating the world equity market I will trim it when it exceeds 50%.
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Re: International Allocation
Old 01-07-2007, 01:15 AM   #8
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Re: International Allocation

20% sounds about right. I go between 15 and 20%, usually the change is driven by the managers in the actively managed mutual funds.

My concern is to limit your emerging international markets. This should be a much smaller portion of your portfolio (5% or less).
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Re: International Allocation
Old 01-07-2007, 07:33 AM   #9
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Re: International Allocation

We are around 30% of total portfolio in international. We are 65% stocks, with around 1/2 of stock portion international.

Diversification is good. I'm long term bearish on the dollar.

Not retired, late 40's.
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Re: International Allocation
Old 01-07-2007, 07:52 AM   #10
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Re: International Allocation

Somewhere around 20% +/- seems like pretty good diversification. Keep in mind that if you live in the US, almost all of your expenses are denominated in US dollars. While it is nice to get an extra 10% bump because the dollar fell this year, the reverse isn't so pleasant - especially when you are selling euros to fund USD expenses.

Expect everyone to start upping their international exposure due to recent performance (probably rotating out of oil or residential housing). Don't follow the lemmings.
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Re: International Allocation
Old 01-07-2007, 11:19 AM   #11
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Re: International Allocation

I am at about 15% of equity assets. I will eventually inch up to 20% or so. I seem to recall that Malkeil had a chart in "Random Walk..." that indicated that 22% of equities was the optimum mix.
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Re: International Allocation
Old 01-07-2007, 11:29 AM   #12
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Re: International Allocation

We have 25% of the equity portion of our portfolio in international funds.
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Re: International Allocation
Old 01-07-2007, 11:40 AM   #13
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Re: International Allocation

I like a 50/50 US/international split, but most people see that as too risky. John Greaney, for example, is not impressed with investing outside the US at all. He is a lot more successful than I am, so keep that in mind.

However, I do have reasons for my choice. See one of my earlier posts on the subject:

http://early-retirement.org/forums/i...4257#msg164257

In general, China and India have finally 'caught fire' after trying various political theories of economics without success. Europe and Japan are awakening from their malaise. The third world is also trying to rise from its ashes. A lot of hot air (fraud, lack of transparency, irrational exuberance, etc.) has been let out of foreign investments in the last 10 years. I think there is fair value out there to be found.

It is like Andrew Tobias said when someone was discussing a stock in strong negative terms, "Even so, isn't there a price so low that you would buy it?" I think I got in somewhere around the bottom.
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Re: International Allocation
Old 01-07-2007, 11:43 AM   #14
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Re: International Allocation

i'm currently at 23.4% (international as % of equity) ... letting it increase, assuming that the run continues, to 25% at which time i'll revisit.

before international equity began it's run, i recall many thinking 20% was excessive ... now many are advocating up to 50% ... wonder what those recommendations will look like when (or if) international "corrects"?

i'm cautious ... there seems to be a tendency to increase recommended weightings in whatever is hot ... setting us up
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Re: International Allocation
Old 01-07-2007, 11:50 AM   #15
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Re: International Allocation

Target Retirement 2015 - ?13%? or so.

Was a big fan of foreign in the 80's/early 90's slice and dice(aka multi-asset days) - simplified and went Lifestrategy moderate when it became availible. Switched to Target in 2006.

A tad of Glaxo and UBS-Ag in individual stocks.

heh heh heh heh - I'll let VG work my asset allocation as I grow older. Hope springs eternal in individual stocks - haven't hit the big one in forty years - but everyone needs a hobby.
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Re: International Allocation
Old 01-07-2007, 12:00 PM   #16
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Re: International Allocation

about 25% of our total portfolio is in an international index, target retirement in 2016
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Re: International Allocation
Old 01-07-2007, 12:28 PM   #17
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Re: International Allocation

Quote:
... now many are advocating up to 50% ... wonder what those recommendations will look like when (or if) international "corrects"?
I hope it doesn't look like I am advocating 50% for others, but there are arguments for it that pursueded me. Many smart people say foreign investment at any level is too risky. I have grown to accept a higher tolerance for risk, so I am trying this for myself.

Bernstien himself showed that there is a point on the efficient frontier (maybe ~20%?) that smooths things out and reduces volatility in the long run. I found some references (see link above) that argue that even 50/50 has a good long term track record. Long term for me means at least ten years.

According to the Coffeehouse Investor, there have been only three ten year periods (starting in 1929,1930 and 1931 if I remember correctly--not guaranteed) since 1900 or so that the S&P or broad US market has been under water. Less Antman asserted that an appropriate 50/50 split has only been underwater for about 5.5 years in a row since the '70s (if memory serves). The last 30 years isn't the last 100 years, for sure, (and the next 30 years are anybody's guess) but it looked like an interesting bet to me. International will 'correct' one day as it has before, as the US market has before also. I am betting that they will be out of phase enough to smooth out the bumps. And, of course, one day I will have to put everything on autopilot, like UncleMick, and simplify everything.

So far, so good, but I could be eating dog food and living under a bridge one day (along with Less Antman ) as a consequence of my decision. Beware!

"Live like you're dying. Invest like you are immortal."

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Re: International Allocation
Old 01-07-2007, 01:15 PM   #18
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Re: International Allocation

About 20% here, but funds and stocks. There are some tanker companies that are currently paying large dividends that I couldn't resist. For example, NAT is paying 16% but I don't think that it is sustainable.
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Re: International Allocation
Old 01-07-2007, 04:13 PM   #19
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Re: International Allocation

I am heavily overweight in international (around 50% of equities ex Canada), around 25% US and 25% Canadian. The Canadian assets tend to have a high resource component. It seems that to go too heavily into the Canadian market risks some loss of diversification since Canadian equities don't have much depth--largely resources and financial.

Since I will be retired in Canada, and the long-term prospect for the US$ is not reassuring, I am very reluctant to be more than about 25% in US equities, and very skittish about US-denominated fixed income. The Canadian dollar tends to track oil, so I tend to like energy stocks. But if I don't want to be overexposed to either Canada or the US, that seems to leave primarily Europe and Asia.
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Re: International Allocation
Old 01-07-2007, 04:56 PM   #20
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Re: International Allocation

Quote:
Originally Posted by bosco
Since I will be retired in Canada, and the long-term prospect for the US$ is not reassuring, I am very reluctant to be more than about 25% in US equities, and very skittish about US-denominated fixed income. The Canadian dollar tends to track oil, so I tend to like energy stocks. But if I don't want to be overexposed to either Canada or the US, that seems to leave primarily Europe and Asia.
Thanks for the Canadian prospective. It's interesting to hear people in other countries start to adjust strategies around expectations of dollar weakness. I wonder if this is just beginning to occur or if it's already widespread and mostly baked into the pricing cake.

Question to bosco: Have you ever been in a barber shop or similar place and heard talk of the dollar's weakness?

Jim
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