Gearhead Jim
Full time employment: Posting here.
Lots of very interesting replies, thanks.
With so many people declaring that they are getting out of international, I am wondering if we are nearing the bottom ...
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
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
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.
Great article. Valuations matter.
With so many people declaring that they are getting out of international, I am wondering if we are nearing the bottom ...
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.
If for whatever reason this country goes off the rails, it is most certainly going to drag the internationals along for the ride, and many will be more vulnerable than the U.S. I doubt that internationals will be a safe haven should the U.S. go into a long recession or depression.Completely ignoring current valuations, market history, and a wealth of research/recommendations to stay diversified of course. If for some insane reason this country goes off the rails in November, for example.