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Old 01-22-2014, 10:40 AM   #21
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Bogle has often taken the position that the Total US market already has plenty of international exposure built into it due to the international business many US companies are involved in. So, this is not an surprise. I respect the man and what he has done for the small investor. But, he is not perfect and I imagine he would be the first to tell us that.
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Old 01-22-2014, 11:02 AM   #22
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What about foreign companies with lots of U.S. exposure? Should we ignore them? U.S. companies may give adequate investment diversity, and the U.S. economy may have adequate stability, so that investors can feel pretty good about their portfolio. But they'd still be ignoring half of their investment possibilities.
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Old 01-22-2014, 11:10 AM   #23
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When E F Hutton speaks....

Nah, give me Jack Bogle. I love the man.
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Old 01-22-2014, 11:13 AM   #24
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FWIW, I split my international into large cap and midcap/smallcap at a 40/60 ratio. Right now the large cap is switched into US large cap based on a momentum algorithm which I've been running for a few years and backtested over the last 40 years. The midcap/smallcap has been in VINEX for 4 months now.

International equities offer some currency diversification ... might be a decent bet over the long term.
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Old 01-22-2014, 12:48 PM   #25
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Even though I count myself as a Boglehead, I have to disagree with 'Saint Jack'. Back in the 'old days' of 'Bogle's Folly' aka the the first Index 500 fund his reasoning went something along the lines of stick with America, they are over half the world market and our multinational corporations internally handle the currency risk.

He has always had a tendency toward home country bias which given our size in the world leaves some wiggle to debate.

I like the new kid(relatively) on the block - Vanguard's Total World Stock index fund.

Have I abandoned my all in Target Retirement 2015 - no.

But I would debate a world stock index fund counterbalanced with a fixed bond index - ? US or world? as a combo worth examining.



heh heh heh - even Saint's can be interviewed too much. Buy the haystack at the lowest possible cost and hold it forever. And watch that turnover.
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John Bogle Suggests International Investing will Lag
Old 01-22-2014, 04:59 PM   #26
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John Bogle Suggests International Investing will Lag

Methinks Mr. Bogle is possibly right, but my VGK and VPL holdings (10% of portfolio) gives me Toyota and Honda, Samsung, Nestle, Roche, etc. These are also multinationals, and aren't necessarily correlated to either Europe's or Japan's economies.
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Old 01-24-2014, 11:27 AM   #27
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For as long as I can remember, Bogle has been a US centric investor wanting US citizens to put little or nothing into international equities. Within the US he has been a pure market-capitalization investor, not a slice-and-dice investor. His greatest contributions in my opinion have been that "Costs Matter" and giving us an inexpensive alternative to playing pick the portfolio manager.

In contrast, Vanguard's website says:
Quote:
Vanguard research has shown that while holding some portion of a diversified equity portfolio in international equities has helped to temper the volatility of U.S. equities, the majority of the benefit was achieved as the international allocation increased from 0% to 20% of total equity exposure, with incremental additional benefit up to 40%. Thus for many investors, an allocation that falls between 20% and 40% should be considered reasonable, given the historical benefits of diversification.
This seems to be a risk equals volatility argument based on historical US performance. While volatility is certainly a issue, especially during the withdrawal stage, it is not the only issue. A Japanese investor probably saw similar advice prior to the peak of the Japanese stock market. If I recall correctly, Less Antman once posted that a Japanese investor with a 50/50 domestic/international stock portfolio was back to the portfolio's peak value within a decade. A 100% Japanese portfolio has certainly not fared as well.

A quick little Google search found this page U.S., Japan Gain On Rest Of World In 2013 which indicates that US market capitalization is currently slightly over one third of worldwide stock market capitalization. Though the Vanguard Total World Stock Index Fund page indicates a country diversification of 49% of common stock in the United States.

Historically, when Briton ruled the waves, a British citizen considered it perfectly normal that he could order goods, invest, and travel nearly anywhere in the world. Eventually the world experienced protectionism, depressions, confiscations, and wars which disrupted this happy state. Currently a US citizen considers it perfectly normal to order goods, invest, and travel nearly anywhere in the world. Until that changes, I think investing globally makes a lot of sense. However, if that changes during your lifetime, don't assume your crystal ball is so much better than everyone else's crystal ball that you will be able to repatriate your international investments to the US without taking a severe haircut as many people all head for the exits at once.

I believe that Bogle would approve that all my investments are made in cost efficient vehicles, that all of my equity mutual funds are index funds, and that my fixed income investments are very conservative and very US centric. However, I think he would say I am taking excess risk by having roughly half my equities invested internationally, and by tilting my US holdings away from the S&P500 towards smallcap funds. Personally, I think I'm taking a little extra risk, and hoping for a little better risk adjusted reward. As I get older, and more interested in having my portfolio on auto-pilot, I get more interest in simple solutions such as the Vanguard Total World Stock Index Fund. However, I'm not interested enough to pay capital gains taxes!
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Old 01-24-2014, 07:33 PM   #28
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Quote:
Originally Posted by bamsphd View Post
For as long as I can remember, Bogle has been a US centric investor wanting US citizens to put little or nothing into international equities. Within the US he has been a pure market-capitalization investor, not a slice-and-dice investor. His greatest contributions in my opinion have been that "Costs Matter" and giving us an inexpensive alternative to playing pick the portfolio manager.

In contrast, Vanguard's website says:
This seems to be a risk equals volatility argument based on historical US performance. While volatility is certainly a issue, especially during the withdrawal stage, it is not the only issue. A Japanese investor probably saw similar advice prior to the peak of the Japanese stock market. If I recall correctly, Less Antman once posted that a Japanese investor with a 50/50 domestic/international stock portfolio was back to the portfolio's peak value within a decade. A 100% Japanese portfolio has certainly not fared as well.

A quick little Google search found this page U.S., Japan Gain On Rest Of World In 2013 which indicates that US market capitalization is currently slightly over one third of worldwide stock market capitalization. Though the Vanguard Total World Stock Index Fund page indicates a country diversification of 49% of common stock in the United States.

Historically, when Briton ruled the waves, a British citizen considered it perfectly normal that he could order goods, invest, and travel nearly anywhere in the world. Eventually the world experienced protectionism, depressions, confiscations, and wars which disrupted this happy state. Currently a US citizen considers it perfectly normal to order goods, invest, and travel nearly anywhere in the world. Until that changes, I think investing globally makes a lot of sense. However, if that changes during your lifetime, don't assume your crystal ball is so much better than everyone else's crystal ball that you will be able to repatriate your international investments to the US without taking a severe haircut as many people all head for the exits at once.

...
+1
Very well said, and consistent with what I have read elsewhere.
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