I haven’t paid anything. 100% US was never under consideration for me, just like 100% Bitcoin or QQQ is not under consideration.Because it's not free. As your own personal returns can attest to, you've paid dearly for this "free lunch." Not to mention the amount of wasted time, needless research, and stress that comes with trying to predict the future. I'd rather not. But to each his own.If it doesn’t matter much why have periods like the late 60s through 80s resulted in a failure for the 100% US crowd?As someone that is 100% US, I will say that backtesting is relevant to me to the extent it proves that either position is irrelevant, not that US is superior. For example, 2000-2010 is mentioned as a reason to invest in ex-US. The conclusion I reached is that it didn't matter a whole lot. Let's assume someone started their investing on 01/01/2000 and put in $1k/month until 2010. The 100% US investor vs 50/50 investor is a whooping $15K difference between the two at the end: https://www.portfoliovisualizer.com/bac ... boNDMuwjrY
The moment that terms like "win rate" enter the conversation, we are now in gambling territory. The lens in which we view investing largely influences our allocations. If you view investing in the market as investing in the success of companies and the economy, it really doesn't matter if you are US, ex-US, or a combination of - you are investing in companies and have no need to defend that ad nauseam because there isn't much to discuss . But those that are focused solely on backtesting, cherry picking start/end points, slicing and dicing, and hoping for a repeat of the past when certain conditions are met are simply gambling. And, more importantly, they falling for the Gambler's Fallacy: I have lost so many times, I am bound the eventually win. Hence the adherent ex-US investor's logic in a lot of this thread.
I think the focus on backtesting/repeating the past is also a very prevalent feature of the 100% US crowd. A belief that recent strong US outperformance will of course continue. That isn't true of all 100% US investors in the thread, but it is clearly a theme that comes up often.
I think there are fallacies all around, don't get me wrong.
Rather than ask myself is it worth it to focus on "win rate" as Mr. Nathan Drake does,I simply ask myself is it worth it? Do I want to inherent currency risk, political risk, geography risk, demographic risk, increased tax liability, and a litany of other risk for the off chance I can juice my returns by an extra 1% return? No, I do no not want to take on that risk.
Which I why I think Bogle emphasized that ex-US is not necessary for the US investor. He never said it was foolish, wasn't without merit, or could have some benefits, he simply said it wasn't necessary. I agree with that.
Being globally invested has prevented that scenario from occurring. Why not take advantage of the free lunch of diversification?
I have achieved my goal of annualized 8-10% returns. I am not counting on 15% in perpetuity just because an asset class has done that for a stretch of time, and neither should you
Statistics: Posted by Nathan Drake — Tue Jul 09, 2024 10:56 am — Replies 6440 — Views 1622549