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Old 08-19-2012, 10:49 AM   #61
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As I reported more than once in other threads recently, even Malkiel, the author of the well-known "Random Walk" book and a proponent of EMH, a director of Vanguard and buddy of Bogle, repeatedly said publicly that foreign stocks and bonds were better buys than US counterparts.

In my non-Vanguard accounts, I do own Vanguard ETFs such as the 3 following. Note the dividend yields.

VSS World Ex-US small Cap 3.06%
VEU World ex-US 3.33%
VWO Emerging Market 2.26%

In my Schwab accounts, I bought Schwab ETFs as it would be a commission-free trade, plus these ETFs have even lower expense ratios than Vanguard (Imagine that!). Schwab offers the following.

SCHC International Small Cap 3.41%
SHCE Emerging market 2.40%
SCHF International 3.09%

The above ETFs have been trailing their US counterparts, although they offer higher dividends and better future prospects according to Malkiel.

SPY S&P500 1.98%
VFINX S&P500 1.84%

SCHA US small cap 1.25%
SHCB US total market 1.82%

I also own country-specific ETFs as well as ADRs of individual foreign companies, but will refrain from mentioning them here. Some even pay higher dividends than the above, but of course may be higher risks.
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Old 08-19-2012, 11:57 AM   #62
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This "Callan Periodic Table of Asset Classes" gives a useful historical view: http://www.callan.com/research//down...free%2f548.pdf
Thanks for posting this - I'd seen a copy somewhere a number of years ago but didn't know where to find it. It is very useful to remind me why diversification across asset classes is important for the long term.
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Old 08-19-2012, 02:16 PM   #63
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Yep, that's the chart that keeps the customers pulling the handle. All we need to know is when the market is at the low point.
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Old 08-19-2012, 02:28 PM   #64
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Seems a decent time to trot out my updated "SP500 Off Lows" chart:





It won't foretell the future but it might cause one to analyze how tactics to be employed now would have worked in the past.
I know it's looking pretty good so far, but I think it's far more likely that we go flattish, like after the '74 recovery, have another bear market in the 2016/2017 timeframe, and THEN start following the '82 trajectory, maybe .
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Old 08-19-2012, 03:02 PM   #65
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I know it's looking pretty good so far, but I think it's far more likely that we go flattish, like after the '74 recovery, have another bear market in the 2016/2017 timeframe, and THEN start following the '82 trajectory, maybe .
If flatish means returning an average of 3% per year out to 2016, that would probably beat bonds.

I don't invest by my guesses at where things are going but I'm optimistic. Might as well be since I'm fully invested now.
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Old 08-19-2012, 04:15 PM   #66
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Here's a recent article by Malkiel.

Burton Malkiel: What Does the Prudent Investor Do Now? - WSJ.com

Some excerpts follow.
"Bonds are the worst asset class for investors. Usually thought of as the safest of investments, they are anything but safe today...
Equities on the other hand are still attractively priced, despite their substantial rise from the October 2011 lows...
The economies of the euro zone are getting worse, not better...
Emerging market equities are particularly attractive...
Real estate is a particularly attractive asset class. Investors who are currently renting the place in which they live should strongly consider buying..."
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Old 08-19-2012, 06:12 PM   #67
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Veremchuka, to be blunt (my specialty) you need to grow a pair. If you are really an asset allocator, then start a DCA to get your portfolio back to 50/50 and stop all the mental masturbation over what asset class is rich or cheap. If you are a market timer, get to it and don't bother asking the unwashed masses here what move you should make.
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Old 08-19-2012, 06:31 PM   #68
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I think Veremchuka is asking good questions. Frequently we are pushed to and fro by our emotions. Investing is best to do rationally (focus on data and process), but we are emotional beings too.

Over the years I've had similar emotions, wanting to have my cake and eat it too. Things that go through the primitive mind:
Quote:
Stocks are up, yea! But that means the party is well under way. What's next?
Made a lot of money in stocks, yea! Damn those taxes.
Expert X is saying stocks are good value. Expert Y is saying bad value, run for hills.
My friend is saying (take your pick: sell, buy, jump out window).
BTW, Lsbcal does take his showers.
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Old 08-19-2012, 07:04 PM   #69
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I always like to be a bit more active in investing. I've always tried to conquer my greed and fear. Of course if I were really successful, I would have a whole lot more.

I am never interested in gambling when going to Las Vegas. And it may surprise you but I do not know any card game. A friend taught me a game some time ago, but I quickly forgot the rule. I am just not interested. I don't care about truly random games. And when it comes to games like poker that require some skills against human adversaries, I just do not do well. In investing, it is mostly you against yourself. I love it.
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Old 08-19-2012, 07:32 PM   #70
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If flatish means returning an average of 3% per year out to 2016, that would probably beat bonds.

I don't invest by my guesses at where things are going but I'm optimistic. Might as well be since I'm fully invested now.
I'm going by the general idea of a long bull cycle then long bear cycle - a pattern that has been repeating since the 1920s, which is why I focus on the patterns of other bear periods. Having come of age at the tail end of the last bear cycle (ending 1981), lived through the euphoria of a strong bull cycle (1982-2000), and then experienced what has happened since 2000, I've been pretty much been convinced that these cycles continue to exist. Which would indicate probably 2016-2017 earliest to climb out of this funk. Some people cite demographic trends to suggest that the current cycle should last longer, but we'll see.

Markets still go up (not just down) during the bear cycles, so rebalancing can really help out.
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Old 08-19-2012, 07:38 PM   #71
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I dunno, I've sort of resigned myself to one of those Firecalc lines that bounce along the bottom and "make it" but just barely. I certainly like your "2016 -2017 climb out of this funk" statement. What drives that?
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Old 08-19-2012, 07:43 PM   #72
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If we keep talking charts, cycles, and stuff like that, isn't it getting more like DMT talk? How long until someone starts mentioning head and shoulders and breakouts, etc...? I dunno.
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Old 08-19-2012, 08:15 PM   #73
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If the concern is that emotional factors (fear of regret, fear of loss) are holding you back from implementing a financial plan that you believe is right for you, then some reading on behavioural investing/economics may be helpful.

Jason Zweig's "Your Money and Your Brain" is a good one: Amazon.com: Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich (9780743276689): Jason Zweig: Books
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Old 08-19-2012, 08:19 PM   #74
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If we keep talking charts, cycles, and stuff like that, isn't it getting more like DMT talk? How long until someone starts mentioning head and shoulders and breakouts, etc...? I dunno.
Or for a really ominous chart formation: The Rare and Dangerous Black Swan Chart Formation
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Old 08-19-2012, 08:35 PM   #75
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I dunno, I've sort of resigned myself to one of those Firecalc lines that bounce along the bottom and "make it" but just barely. I certainly like your "2016 -2017 climb out of this funk" statement. What drives that?
Who knows? I'm not sure that anyone can predict what drove each cycle. Maybe it's nothing more than finally working out the excesses of the prior cycle?
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Old 08-19-2012, 08:39 PM   #76
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If we keep talking charts, cycles, and stuff like that, isn't it getting more like DMT talk? How long until someone starts mentioning head and shoulders and breakouts, etc...? I dunno.
When cycles last 16-18 years, a DMT has to be very, very patient. I don't know of anyone who would sell in 2000 and wait until 2016/2017 to get back in. On the other hand, the TA folks I know are evaluating moves in a few months or less and are usually ready to turn on a dime.
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Old 08-19-2012, 08:48 PM   #77
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In a long-ago post, I said that I aspired to be a CMT. That is someone who tries to look at economic developments, business cycles, fiscal policies, demographics, etc... to see if the market is more likely to go up or down. Even using fundamentals is still a quixotic task because the market is not really rational and may stay over or undervalued for a long time.

What I have found is that if I buy something based on a fundamental belief, I would have an easier time to wait for the good news to come and its price to rise. I would not have that patience if I keep watching for a shoulder or a head.

Just teasing in the above post, and not saying anyone here is a chartist...
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Old 08-19-2012, 11:09 PM   #78
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Interesting chart that shows we are actually in a relatively strong recovery.

Judging solely by the stock market, that is.
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Old 08-19-2012, 11:12 PM   #79
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How long until someone starts mentioning head and shoulders and breakouts, etc...? I dunno.
Maybe we need to change the subject to skin hygiene?

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I don't know of anyone who would sell in 2000 and wait until 2016/2017 to get back in. On the other hand, the TA folks I know are evaluating moves in a few months or less and are usually ready to turn on a dime.
H0cu$. If he's to be believed (not always a good idea) then he went 100% cash in 1996 and has been waiting ever since for equity valuations to revert. Any day now...
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Old 08-19-2012, 11:30 PM   #80
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H0cu$. If he's to be believed (not always a good idea) then he went 100% cash in 1996 and has been waiting ever since for equity valuations to revert. Any day now...
I hate to ask, but out of morbid curiosity has there been a recent sighting?
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