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When Global Stocks Go On Sale
Old 02-11-2016, 01:05 PM   #1
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When Global Stocks Go On Sale

With all the threads on stock market declines, I thought this might be of interest. Ben Carlson hosts a website called "A Wealth of Common Sense". A recent entry When Global Stocks Go On Sale

His point, simply made, is that stocks around the world are down more than here in the US, on average 30%, and that usually when stock prices fall that much they are higher 1, 3 and 5 years later. His conclusion

Quote:
Using the past as our guide, itís clear that bear markets tend to be a great time to put money to work for those who can look past short-term volatility. Long-term savers and investors should see this as an opportunity, not a crisis.
Global stocks are on sale.

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Old 02-11-2016, 02:30 PM   #2
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Agreed. I've been using the strong USD to do a little overseas investment shopping.
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Old 02-11-2016, 02:30 PM   #3
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Ok, but you go first.
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Old 02-11-2016, 03:14 PM   #4
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I re-balanced into International and Emerging funds on 12/31/15. I may have to do it again if the current trend continues.
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Old 02-11-2016, 03:50 PM   #5
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I have an international component in my asset allocation. I rebalance periodically...
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Old 02-11-2016, 04:02 PM   #6
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Pumping dollars into RNWEX - American funds new world R4, via 401k biweekly.

Has been quite a while since I had to rebalance, but it appears that will need to be done.
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Old 02-11-2016, 04:33 PM   #7
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I've been getting killed in the ex-US piece of my portfolio lately. Dollar cost averaging ftw.
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When Global Stocks Go On Sale
Old 02-11-2016, 05:53 PM   #8
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When Global Stocks Go On Sale

I think it was a mantra a few years ago, at least from CNBC, I did invest overseas and still down BIG. I did buy some more recently but thought I was NOT being smart this morning, luckily that was a very small part of my portfolio.


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Old 02-11-2016, 06:51 PM   #9
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Vanguard Total International Stock ETF VXUS has a P/E ratio of 14, and a dividend yield of 3.0%.

The Emerging Market ETF VWO has P/E of 12, and dividend yield of 3.45%.

For comparison, the US Total Market VTI has a P/E of 17, with 2.10% dividend yield.

Buy, buy, buy...
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Old 02-11-2016, 07:50 PM   #10
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Emerging Markets swings high, or swings low. Follow the bouncing orange square...

Review: The Callan Periodic Table of Investment Returns 2015 | TopForeignStocks.com
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Old 02-11-2016, 08:09 PM   #11
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I've been buying internationals (by rebalancing mostly) for the past couple of years. Developed markets, emerging markets (in bulk!), international value. This stuff kept getting smashed.

Look at the eurozone - forex alone has us down about 30% in USD terms since the peak in ~2008.
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Old 02-11-2016, 09:17 PM   #12
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I live abroad and I am up to 63% international stock now -- in fact, I just bought some more today. Since most of my spending is non-dollar, it provides currency diversification -- although still not quite enough since all my bonds and my future Social Security are in dollars.

There is a free lunch aspect to Americans retired abroad -- when markets are down the dollar tends to get stronger and vice versa.
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Old 02-11-2016, 09:19 PM   #13
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Quote:
Originally Posted by FUEGO View Post
I've been buying internationals (by rebalancing mostly) for the past couple of years. Developed markets, emerging markets (in bulk!), international value. This stuff kept getting smashed.

Look at the eurozone - forex alone has us down about 30% in USD terms since the peak in ~2008.
It's a bear trap. I got a toe caught in there too. Waiting a bit to see if things get really messy so I can jump the rest of the way in.

This is when things get interesting. Weeeee!
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Old 02-11-2016, 09:21 PM   #14
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Emerging Markets swings high, or swings low. Follow the bouncing orange square...

Review: The Callan Periodic Table of Investment Returns 2015 | TopForeignStocks.com
For the last 3 years, the orange square does not bounce as much as dribble.

Any day now... You would think that with low energy cost, developing countries would do well.
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Old 02-11-2016, 10:14 PM   #15
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It's a bear trap. I got a toe caught in there too. Waiting a bit to see if things get really messy so I can jump the rest of the way in.

This is when things get interesting. Weeeee!
If it goes down more, I'll keep rebalancing into the drop. Not much fun on the way down but lots of fun on the way up (thinking back to mid-March 2009 now!).
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Old 02-11-2016, 11:29 PM   #16
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Any day now... You would think that with low energy cost, developing countries would do well.
Quite a few of them are pumping the oil .. Venezuela, Nigeria, Russia, Brazil.

If this level holds for a few more weeks (when I'm back in Europe) I'm reallocating cash to equities, 10% or so. Been waiting a few years for a good moment.

Then if summer comes around and there is a bigger drop, another 10%!
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Old 02-11-2016, 11:51 PM   #17
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I do not have the breakdown, but there are more oil-consuming countries than oil-producing ones, and I expect that the total stock market values of the former dwarf that of the latter. Else, the overall P/E would not be as low as it is, relative to that of the US market. And one can always buy country-specific ETFs.

By the way, Korean's small-cap Kosdaq (somewhat similar to Nasdaq) just halted trading as its index drops 8%. The country's large-cap Kospi index drops 1.5% and still trades. The P/E of the Kospi index is a mere 10.5.
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Old 02-12-2016, 04:45 AM   #18
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For the last 3 years, the orange square does not bounce as much as dribble.

Any day now... You would think that with low energy cost, developing countries would do well.
Can never understand what those foreigners are saying, or I'd know what they're doing!

The orange square will bounce. Maybe you downloaded the version without years 2016-2020 filed in?
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When Global Stocks Go On Sale
Old 02-12-2016, 06:26 AM   #19
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When Global Stocks Go On Sale

Quote:
Originally Posted by NW-Bound View Post
Vanguard Total International Stock ETF VXUS has a P/E ratio of 14, and a dividend yield of 3.0%.

The Emerging Market ETF VWO has P/E of 12, and dividend yield of 3.45%.

For comparison, the US Total Market VTI has a P/E of 17, with 2.10% dividend yield.

Buy, buy, buy...

My large position of VXUS is down more than 20 percent. I'm At the upper end of my AA. Sitting and holding.

There is oil exposure in VXUS. Not to mention strong dollar.

I do like the div yield. Hence staying put.

Thought about putting another 20 percent in to go outside my normal AA ... VXUS has been anemic for a couple years.
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Old 02-12-2016, 08:40 AM   #20
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I have recently rebalanced my Mom's investments after not doing so for many years and as part of that increased the international component from what I had initially set it 10 years ago. Similarly, I increased the emerging markets in my portfolio and am buying to get to the new level. I think it will pay off in the long run but there may be some pain in the interim.
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