Poll

Wich of these assets is lagging the most

US stocks
Intl. Developed markets
Emerging markets
Bonds
Commodities
Gold
Treasury money market
None of the above - other

Author Topic: Poll: wich asset class is lagging now?  (Read 3117 times)

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Poll: wich asset class is lagging now?
« on: October 20, 2016, 01:12:25 PM »
Dont know if this have been raised here lately but I am curious to know your opinion.

P/E of stocks are in the 18 range, not a deal anymore

Bonds and real estate could be hit by a rate raise anytime...

Gold, well...

Cash and money market?

For the record, I'm 100% stock through index ETFs and worlwide diversified
« Last Edit: October 20, 2016, 07:23:50 PM by Le Barbu »

spud1987

  • Bristles
  • ***
  • Posts: 356
  • Location: SF Bay Area
Re: Wich asset class is lagging now?
« Reply #1 on: October 20, 2016, 01:54:15 PM »
Emerging markets are relatively cheap. But they've been "cheap" for about 3 years now so don't expect a quick turnaround. Energy sector stocks were cheap earlier this year, although I suspect they've increased in value since the OPEC deal.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Wich asset class is lagging now?
« Reply #2 on: October 20, 2016, 02:05:55 PM »
Um, how about foreign stocks?  On a CAPE basis they're at about a 40% discount to U.S. stocks.

Foreign like devoloped, emerging or like VXUS?

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1125
  • Age: 36
Re: Wich asset class is lagging now?
« Reply #3 on: October 20, 2016, 02:58:17 PM »
I picked the developing emerging markets but just by the numbers the foreign (non-US) markets seem to offer better deals at the moment since they have been "lagging" for a while.

That said, I'm obviously not changing anything and sticking with my 50% VTI, 30% VEU, 20% BND allocation.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Wich asset class is lagging now?
« Reply #4 on: October 20, 2016, 03:22:48 PM »
I picked the developing emerging markets but just by the numbers the foreign (non-US) markets seem to offer better deals at the moment since they have been "lagging" for a while.

That said, I'm obviously not changing anything and sticking with my 50% VTI, 30% VEU, 20% BND allocation.

Well, I do not intend to change my A.A. neither!

That said, why do you dont own VWO or VXUS at least?

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #5 on: October 21, 2016, 11:38:54 AM »
Ok, I'm going to go meta here.  The questions posed here seem conflated to me.  What asset class is most lagging is a different question than what asset class is likely to outperform in the future.  So money market will generally lag bonds and stocks but that doesn't mean it is a great buy right now (or maybe it is, but the two questions aren't the same).  Is your question in the poll meant to identify the asset class most likely to outperform in the future or just a factual question around what asset class has "lagged" over some period of time?  I'm guessing the former?  Or is there an implicit assumption in your question of mean reversion--that is, that a lagging asset class will eventually make up lost ground?

I admit my poll's question is confusing. I just want to know from people here wich asset class is trading at a discount and is the most likely to outperform within the next years. Commodities are trading low for more than 3 years now, foreign stocks also underperformed US stocks.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Wich asset class is lagging now?
« Reply #6 on: October 21, 2016, 11:42:33 AM »
I picked the developing emerging markets but just by the numbers the foreign (non-US) markets seem to offer better deals at the moment since they have been "lagging" for a while.

That said, I'm obviously not changing anything and sticking with my 50% VTI, 30% VEU, 20% BND allocation.

Well, I do not intend to change my A.A. neither!

That said, why do you dont own VWO or VXUS at least?
Sorry, I confused VEU with VEA. So, you already own emerging markets.

Lagom

  • Handlebar Stache
  • *****
  • Posts: 1258
  • Age: 35
  • Location: SF Bay Area
Re: Poll: wich asset class is lagging now?
« Reply #7 on: October 21, 2016, 12:29:56 PM »
I gotta admit I am not nearly as into sifting through data and trying to outsmart the market as many (yay passive index investing!), but I would think developed foreign. Emerging is the sexy pick, but even with all of their recent woes, the strength of the economies in developed markets don't seem to justify the tepid returns we've been seeing.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #8 on: October 21, 2016, 01:03:13 PM »
I gotta admit I am not nearly as into sifting through data and trying to outsmart the market as many (yay passive index investing!), but I would think developed foreign. Emerging is the sexy pick, but even with all of their recent woes, the strength of the economies in developed markets don't seem to justify the tepid returns we've been seeing.

Dont know what should be considered as trying to outsmart the market but lets consider this scenario. In Canada, a 100% stock portfolio benchmark is usualy 35% Canadian, 35% US and 30% Intl. Years ago, I decided to set my A.A. at 30% ZCN (canadian index), 25% VTI, 20% VBR and 25% VXUS. Everything worked perfectly fine and easy to manage. Now, if I decide to reduce my small-cap-value tilt (VBR) to 10% and crank my VXUS to 35%, I would still be damn close to the normal benchmark.

Lagom

  • Handlebar Stache
  • *****
  • Posts: 1258
  • Age: 35
  • Location: SF Bay Area
Re: Poll: wich asset class is lagging now?
« Reply #9 on: October 21, 2016, 03:13:42 PM »
I gotta admit I am not nearly as into sifting through data and trying to outsmart the market as many (yay passive index investing!), but I would think developed foreign. Emerging is the sexy pick, but even with all of their recent woes, the strength of the economies in developed markets don't seem to justify the tepid returns we've been seeing.

Dont know what should be considered as trying to outsmart the market but lets consider this scenario. In Canada, a 100% stock portfolio benchmark is usualy 35% Canadian, 35% US and 30% Intl. Years ago, I decided to set my A.A. at 30% ZCN (canadian index), 25% VTI, 20% VBR and 25% VXUS. Everything worked perfectly fine and easy to manage. Now, if I decide to reduce my small-cap-value tilt (VBR) to 10% and crank my VXUS to 35%, I would still be damn close to the normal benchmark.

Oh yeah, I didn't mean to imply any judgement, just that I have not spent a lot of energy trying to figure out things like how I should consider things like PE ratios, etc. Personally, for entirely emotional reasons, I weight a bit more heavily towards US stock than international (65/35), but I think any reasonably thought out portfolio should do perfectly fine, as long as one is not attempting market timing shenanigans or chasing overly large returns through speculative funds.

« Last Edit: October 21, 2016, 04:39:47 PM by Lagom »

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #10 on: October 21, 2016, 05:35:16 PM »
I gotta admit I am not nearly as into sifting through data and trying to outsmart the market as many (yay passive index investing!), but I would think developed foreign. Emerging is the sexy pick, but even with all of their recent woes, the strength of the economies in developed markets don't seem to justify the tepid returns we've been seeing.

Dont know what should be considered as trying to outsmart the market but lets consider this scenario. In Canada, a 100% stock portfolio benchmark is usualy 35% Canadian, 35% US and 30% Intl. Years ago, I decided to set my A.A. at 30% ZCN (canadian index), 25% VTI, 20% VBR and 25% VXUS. Everything worked perfectly fine and easy to manage. Now, if I decide to reduce my small-cap-value tilt (VBR) to 10% and crank my VXUS to 35%, I would still be damn close to the normal benchmark.

Oh yeah, I didn't mean to imply any judgement, just that I have not spent a lot of energy trying to figure out things like how I should consider things like PE ratios, etc. Personally, for entirely emotional reasons, I weight a bit more heavily towards US stock than international (65/35), but I think any reasonably thought out portfolio should do perfectly fine, as long as one is not attempting market timing shenanigans or chasing overly large returns through speculative funds.

I understand, chasing performances comes with perils. But in your own situation, choosing now to realocate your AA to like 60/40 or even 55/45 would be like the opposite.  I do not mean you should do it, but if you are comfortable with this kind of AA, the timing to rebalance is not bad.
« Last Edit: October 21, 2016, 05:42:24 PM by Le Barbu »

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #11 on: October 21, 2016, 05:41:09 PM »
Dont know what should be considered as trying to outsmart the market but lets consider this scenario. In Canada, a 100% stock portfolio benchmark is usualy 35% Canadian, 35% US and 30% Intl. Years ago, I decided to set my A.A. at 30% ZCN (canadian index), 25% VTI, 20% VBR and 25% VXUS. Everything worked perfectly fine and easy to manage. Now, if I decide to reduce my small-cap-value tilt (VBR) to 10% and crank my VXUS to 35%, I would still be damn close to the normal benchmark.

VBR and other US small caps would certainly be on my list of non-laggards... even the vanguard website shows a PE for VBR >23.  seems rich...

I just try to figure out if I would like to increase my VXUS from 25 to 35%, should I sell some VTI or VBR? My first tougth is reducing VBR from 20 to 10%

My final AA would be 30% ZCN, 25%VTI, 10%VBR and 35%VXUS.

Seppia

  • Pencil Stache
  • ****
  • Posts: 616
  • Age: 39
  • Location: NYC
Re: Poll: wich asset class is lagging now?
« Reply #12 on: October 22, 2016, 02:24:49 AM »
Obviously nobody knows what's going to happen in the next two three years, but based on cape10 and PB ratios, it looks like emerging and international ex-US are poised to do better than us stocks for sure.

I voted for emerging, but I also think developed Europe could be a very good choice, it has basically returned zero in the last 15 years, I would expect it to revert to the mean and do at least slightly better :)

Europe should be a less bumpy ride than emerging.

Some nice research
https://www.researchaffiliates.com/en_us/asset-allocation.html

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #13 on: October 22, 2016, 05:38:06 AM »
Obviously nobody knows what's going to happen in the next two three years, but based on cape10 and PB ratios, it looks like emerging and international ex-US are poised to do better than us stocks for sure.

I voted for emerging, but I also think developed Europe could be a very good choice, it has basically returned zero in the last 15 years, I would expect it to revert to the mean and do at least slightly better :)

Europe should be a less bumpy ride than emerging.

Some nice research
https://www.researchaffiliates.com/en_us/asset-allocation.html

Interesting charts. As a Canadian, my home bias have always been between 20-35% (actualy 30%) and my US/Intl. anywhere from 25/45% to 45/25% and I am seriously thinking to overweigth my VXUS. This ETF holds all of the ex-US stocks including small cap. so I would not have to choose between Developed and Emerging markets. I already hold this ETF for a while, and the return is below zero up to date. My investing timeframe is still a lot more than 10 years, so the risk is low.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27555
  • Age: -999
  • Location: Traveling the World
Re: Poll: wich asset class is lagging now?
« Reply #14 on: October 23, 2016, 02:42:42 AM »
I think you're asking the wrong question.

"Which of these assets is lagging the most?"

My answer: Who cares?

The question to ask, IMO, is "Which of these assets should I invest in?"

The answer to that question depends on a number of things, but it's very likely that "this asset is lagging" is a very minor one of those considerations, at most.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #15 on: October 23, 2016, 11:57:37 AM »
I think you're asking the wrong question.

"Which of these assets is lagging the most?"

My answer: Who cares?

The question to ask, IMO, is "Which of these assets should I invest in?"

The answer to that question depends on a number of things, but it's very likely that "this asset is lagging" is a very minor one of those considerations, at most.

Thank you for stoping by Arebelspy!

When I decided to ask this question and set the poll, it was more for curiosity purpose than changing my investing pattern or A.A.

I am a DIY low cost index investor for 5 years now. My first goal is to invest in assets with a high return potential on the long term, keep fees as low as possible, maximise taxes and only buy few liquid assets. For this reason, I would not keep more than 1 year of living expenses in cash or cash equivalent, dont buy gold or commodities (both for their long term potential and high MER ETF). Bonds and real estate are fragile due to low interest rates having no way but going up...someday.

Our family debt/assets ratio is kept in the 20% range on purpose (HELOC @ 2.05%) allowing us to have a better cashflow and lower taxes. That being said, low cost broad stock indexes spread through US, Intl. and Canada (home bias) are about the only investments that fit for us. Before buying any bonds, I would just lower our debt.

Seeking for low volatility never been a consideration. We went through many downturns since 1998 (very good timing to start investing!!). We are in our mid 40s and have plenty of time ahead to handle the markets bumps.

So, wich assets do you think I should invest in?

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2198
  • Location: EastCoast
Re: Poll: wich asset class is lagging now?
« Reply #16 on: October 25, 2016, 07:40:18 AM »

So, wich assets do you think I should invest in?

Is that your question, or the one in the thread name? I don't understand why you'd have a poll for which has been lagging the most? That's not really an opinion question. Just go and look at return data for all the classes and you'll have your answer. That's like asking "in your opinion when did the train arrive?"..

Or was this a roundabout way of asking which will do better going forward? At least that's a valid poll question.

effigy98

  • Bristles
  • ***
  • Posts: 319
Re: Poll: wich asset class is lagging now?
« Reply #17 on: October 25, 2016, 09:30:39 AM »
I like health care once it is a sure win for Hillary. I think investors will over react and over sell this sector.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1040
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: Poll: wich asset class is lagging now?
« Reply #18 on: October 25, 2016, 01:08:48 PM »

So, wich assets do you think I should invest in?

Is that your question, or the one in the thread name? I don't understand why you'd have a poll for which has been lagging the most? That's not really an opinion question. Just go and look at return data for all the classes and you'll have your answer. That's like asking "in your opinion when did the train arrive?"..

Or was this a roundabout way of asking which will do better going forward? At least that's a valid poll question.

Well, I must admit once again my question is...questionable. I am still surprized to get answers in 8 different categories! I appreciate getting MMM comunity feedback on top of crude information.

I did look at return datas and for the last 3-10 years, commodities sucks, emerging markets and ex-US developed markets are not far behind. Within those 3 asset classes, I already own 2 through VXUS. I just intend to sligthly increase my positions into VXUS selling some VTI and VBR wich are the winners over the same period.

Because I am from Canada, I dont feel the need to own gold or commodities. A plain index fund of our stock market expose us to these more than enough.

JAYSLOL

  • Handlebar Stache
  • *****
  • Posts: 1132
Re: Poll: wich asset class is lagging now?
« Reply #19 on: October 25, 2016, 06:53:38 PM »

So, wich assets do you think I should invest in?

Is that your question, or the one in the thread name? I don't understand why you'd have a poll for which has been lagging the most? That's not really an opinion question. Just go and look at return data for all the classes and you'll have your answer. That's like asking "in your opinion when did the train arrive?"..

Or was this a roundabout way of asking which will do better going forward? At least that's a valid poll question.

Well, I must admit once again my question is...questionable. I am still surprized to get answers in 8 different categories! I appreciate getting MMM comunity feedback on top of crude information.

I did look at return datas and for the last 3-10 years, commodities sucks, emerging markets and ex-US developed markets are not far behind. Within those 3 asset classes, I already own 2 through VXUS. I just intend to sligthly increase my positions into VXUS selling some VTI and VBR wich are the winners over the same period.

Because I am from Canada, I dont feel the need to own gold or commodities. A plain index fund of our stock market expose us to these more than enough.


+1