The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: heybro on October 04, 2014, 01:37:05 AM
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Answer Poll Above.
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Im in the middle of A and B. 15%
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I tend to be a fan of International and Mid Cap stocks, about 5-10% more than the typical breakdown. There are numerous large-company International companies that appeal to me, plus Mid-Caps seem to be the sweet spot between the volatility of Small Caps and the sometimes "Ho-Hum, let's trod along" feeling I get from Large Caps.
Nothing concrete to back it up, just overall feeling.
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International stocks are 30% of my stock allocation. I keep bonds at half my age, the rest of my portfolio is stocks. I try to keep international stocks in my taxable account for the foreign tax credit.
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I just dumped all my international stock two days ago, and rolled it over into a domestic S&P 500 fund.
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For you in the US, 30% international is enough because your domestic market offer international exposure already. Much more complicated for us in Canada because ouf domestic is 4% of the world´s
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I just dumped all my international stock two days ago, and rolled it over into a domestic S&P 500 fund.
So you bought high and sold low????
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I just dumped all my international stock two days ago, and rolled it over into a domestic S&P 500 fund.
So you bought high and sold low????
Nope, basically I exchanged from one to the other, there wasn't much of a price difference per share, I'm just more bullish on the US economy at the moment. I don't have many choices left, as I'm close to (regular) retirement, and only 1/2 way there.
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I would like to own ZERO International Stock but "everyone" tells me to own it.
Arguments for or against?
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This article by Rick Ferri is fantastic and explains why you should hold foreign stocks and says that a 70% US and 30% foreign allocation generates a higher risk-adjusted return than if you were 100% US stocks.
http://www.rickferri.com/blog/investments/foreign-stocks-for-the-long-run/
Vanguard also recommends 70/30 when you run this tool: https://personal.vanguard.com/us/funds/tools/recommendation
Vanguard's Lifestrategy funds and Target Retirement funds are 70% US and 30% foreign as well.
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I only own one fund: Vanguard Total World Stock Index (VTWSX / VT). The fund has 49% of its portfolio in US stocks.
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Haha Logan, Your Ferri link only gave me more reasons to not invest internationally!
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Haha Logan, Your Ferri link only gave me more reasons to not invest internationally!
Well it's completely up to you what you do. I'm sure you would do just fine invested completely in US stocks.
Sent from my iPhone using Tapatalk
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Thank You. My gut intuition is to not invest internationally. I just want to be sure I've played devil's advocate with you thick STACHES!
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Hmmm, I've been considering selling about $11k of VTIAX I have in a taxable account.
If I sold it right now I'd actually make a small amount on my total investment, but also pick up some short-term capital gains losses - like $250 worth, so not much - which I could use when I file 2014 taxes. My cost basis is higher due to dividend reinvestment which is why I could make money but still claim this loss.
The reason I might do this is I've been thinking I could put that money into a couple IRA's next year as I'm going to be married in 2015, but not 2014.
I'm not sure what I want to do, though.
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Thank You. My gut intuition is to not invest internationally. I just want to be sure I've played devil's advocate with you thick STACHES!
Don't use intuition. Intuition is stupid. Use math. It's never wrong. Read and understand the value of diversified, non-corelated asset classes.
Having said that, it may be that for your situation, all US stocks makes sense (although I don't know how that could be). But, dude, you've started two threads on this and it just seems like your mind is made up and you just want confirmation.
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I only own one fund: Vanguard Total World Stock Index (VTWSX / VT). The fund has 49% of its portfolio in US stocks.
I sometimes wonder if this will always be the case (for the foreign tax credit eligibility) or if the US economy is a higher % for the world, if the fund will adjust as required.
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I love you guys.
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About 30% currently, all of it in VTS, which is Vanguard's US stocks ETF.
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This article by Rick Ferri is fantastic and explains why you should hold foreign stocks and says that a 70% US and 30% foreign allocation generates a higher risk-adjusted return than if you were 100% US stocks.
This is a pet peeve of mine, especially because we all know "past performance doesn't guarantee future returns," but we all fall prey to it anyways (what other choice do we have???). Anyways, 30% international generated a higher risk-adjusted return, but the real question is whether there's any reason to think this will continue.
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This article by Rick Ferri is fantastic and explains why you should hold foreign stocks and says that a 70% US and 30% foreign allocation generates a higher risk-adjusted return than if you were 100% US stocks.
This is a pet peeve of mine, especially because we all know "past performance doesn't guarantee future returns," but we all fall prey to it anyways (what other choice do we have???). Anyways, 30% international generated a higher risk-adjusted return, but the real question is whether there's any reason to think this will continue.
Is there any reason to think that it won't continue? It seems like it is a better bet to be more diversified. Will it work out? Nobody knows.
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This article by Rick Ferri is fantastic and explains why you should hold foreign stocks and says that a 70% US and 30% foreign allocation generates a higher risk-adjusted return than if you were 100% US stocks.
This is a pet peeve of mine, especially because we all know "past performance doesn't guarantee future returns," but we all fall prey to it anyways (what other choice do we have???). Anyways, 30% international generated a higher risk-adjusted return, but the real question is whether there's any reason to think this will continue.
Is there any reason to think that it won't continue? It seems like it is a better bet to be more diversified. Will it work out? Nobody knows.
I'm not saying don't diversify. I'm saying know the risks. In the last 30 years, adding gold to your portfolio also increased risk-adjusted returns. Why doesn't everyone do this?
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I find these threads amusing. They are pretty much all a result of the very recent underperformance of international stocks. During periods like 2002-2007 (i.e international returning 16% vs 7% for US) you will have all the threads talking about how their are all these great foreign companies and limiting yourself to US ones is stupid. Then when the cycle switches you hear about that their is no need for international, after all US stocks have outperformed and they sell stuff overseas.
People like to talk about buying undervalued and out of favor assets. It is really hard to do though. In hindsight it looks obvious. At the time though buying an our of favor asset is really hard.
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I find these threads amusing. They are pretty much all a result of the very recent underperformance of international stocks. During periods like 2002-2007 (i.e international returning 16% vs 7% for US) you will have all the threads talking about how their are all these great foreign companies and limiting yourself to US ones is stupid. Then when the cycle switches you hear about that their is no need for international, after all US stocks have outperformed and they sell stuff overseas.
People like to talk about buying undervalued and out of favor assets. It is really hard to do though. In hindsight it looks obvious. At the time though buying an our of favor asset is really hard.
Exactly! Or 2001-2010 when it was "why would you buy stocks, bonds returned better!"