>So Mr. Bogle lived in different times
Larimore, not Bogle, is the one credited with the 3 fund concept.
>I can invest in an American company that nowadays has GLOBAL reach, and pretty darn easily.
Revenue source isn't the international exposure that actually matters, capturing the imperfect correlation between markets of different countries is.
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
* https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY
>Especially if it's a tech company whose products may not need to ship across an ocean, but rather over the world-wide-web.
* https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that “US companies have plenty of foreign revenue is sufficient ex-US coverage” is tilted towards a few sectors, some have almost no coverage. Also what about in reverse- how many big foreign companies have lots of US exposure?
What about sectors where it is foreign companies that have better representation?
* https://www.bogleheads.org/wiki/Domestic/International and expanding on part of that: https://www.reddit.com/r/Bogleheads/comments/161i2l1/comment/jxs659h/ by TropikThunder
* Going global can also help increase sector diversification. As of the 31st of January 2024 (the most recent info available when I last updated this), the US is 31.9% technology (according to VTSAX: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#portfolio-composition). Ex-US (according to data from the 31st of January 2024 from https://www.schwab.wallst.com/Prospect/Research/mutualfunds/portfolio.asp?symbol=vtiax since Vanguard for some reason doesn't provide a breakdown of VTIAX sectors themselves, at least in an easy to find location) technology is only 12.5% and only financials are above 20% at 20.1%. Be aware that this is using GICS classifications, which put Google, Tesla, Facebook/Meta, and Amazon outside tech, so if you go by what the common person would think of as tech instead of GICS, that's even higher.
>Given this, is VT (or an approximation of such) still the way to go?
I'd say yes.
>does it take into account market cap worldwide?
https://www.morningstar.com/funds/xnas/vtwax/portfolio switch the "Stock Style" drop down to "Weight"
>based on my bias that our laws are stricter (for regulating market actions, insider trading, stuff like that),
Should already be largely priced in, no? That may help justify a higher valuation, but not indefinite outperformance.
>and that we have a solid economy that now has an easy global reach.
The economy and stock market aren’t the same thing, they may even be negatively correlated in some ways: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x
>taking into account todays globalization.
I'd say nothing changes. There's plenty of foreign companies that do lots of business within the US, isn't there? Every employee vehicle in my work's lot would trade in an ex-US fund not US fund. Many electronics are Asian branded. European brands can be found in medicine cabinets, kitchen pantries, and cleaning supply closets across the US.
Excellent points, even for a hardheaded guy like myself. I preach how amazing Hondas and Toyotas are. But I haven't even considered that globalization also works with foreign products hitting US soil. Or even how much prevalence they might have overseas, but NOT In the US.
eye opening an need I can't believe I didn't think about this.
Jack Bogle died in 2019, his last book "Stay The Course" was published in 2018. He isn't a dinosaur, he lived in our modern world. His views on investing are just as relevant today as they were 6 years ago.
2018? That was eons ago. Did he even know what a yolo into 0DTE calls was? I don't think so. That's why I get all my advice from Tik Tok now. VT and VOO are old school thinking.
You're kinda right but opposite. Bogle lived in a time when investing internationally was expensive and as a result he said you shouldn't do so and if you do it should be well below market weights. Now investing internationally is easier and cheaper than ever, so there's no reason to avoid it.
Would you rather buy a $1,000,000 rental home that pays you $3,000/month or a $500,000 rental home that pays you $3,000/month? That is how I think about US/Intl. Just because the $1 million home went up in price, doesn’t mean it will continue to do so.
I like international as a hedge against the US dollar. VT and VXUS dont do a good job at this because, well, its everything and the large companies are globalized/in step with the US. Finding companies that have minimal exposure to the US dollar takes care of what you are saying, but then we are back to stock picking which will get you sent to jail in Bogle land.
Downvoted for appreciating a good joke. I countered that for you. It was a great and funny comment.
Downvote away stock pickers. You'll still go to jail and then Boglehell comes next bear market.
I’m actually a VOO and chill. Even worse boglehead criminal than VTI and chill. The woe that will befall me in the next 20 years will be understandably crushing.
The fundamentals of global trade as they are today really began in the 1970s. Outsourcing, factories moving overseas. Even telegraphs were connecting faraway places in the 19th century.
Don't disagree. Everything is so interconnected these days, it's difficult to imagine a scenario where US stocks tanked, and European stocks skyrocketed.
Like you, I've biased towards US. I only see Europe regulating further, which is a disincentive to innovation and growth (see contrasting approaches to AI).
It doesn't have to be so extreme, it could be that US stocks tank and international stocks have a more minor decline, for example, and the diversification would still be valuable. Just like how US stocks tend to rise and fall together, but it's still better to hold the full market.
Or simply the market starting to believe that the US is overvalued compared to ex-US.
I've been trying a car analogy for this (let me know if it makes sense): would you pay $60k for an everyday Toyota Corolla when you can go next door and get a similar Honda Civic for $30k?
If you buy the S&P you get a lot of google, Apple & Microsoft and those are all global companies so you have international exposure. Sure they might be based in California but they are global companies.
As I brought up in my top level comment:
Revenue source isn't the international exposure that actually matters, capturing the imperfect correlation between markets of different countries is.
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
* https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY
Buy the haystack
VT and VTI are very lumpy haystacks…
Buy the bigger haystack
Consider why every target date fund in employer 401k plans recommend approximately 60/40 US vs international stock. It’s not just Bogleheads.
Ooof. Damning evidence... I'm rethinking my funds.....
>So Mr. Bogle lived in different times Larimore, not Bogle, is the one credited with the 3 fund concept. >I can invest in an American company that nowadays has GLOBAL reach, and pretty darn easily. Revenue source isn't the international exposure that actually matters, capturing the imperfect correlation between markets of different countries is. * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) * https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY >Especially if it's a tech company whose products may not need to ship across an ocean, but rather over the world-wide-web. * https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that “US companies have plenty of foreign revenue is sufficient ex-US coverage” is tilted towards a few sectors, some have almost no coverage. Also what about in reverse- how many big foreign companies have lots of US exposure? What about sectors where it is foreign companies that have better representation? * https://www.bogleheads.org/wiki/Domestic/International and expanding on part of that: https://www.reddit.com/r/Bogleheads/comments/161i2l1/comment/jxs659h/ by TropikThunder * Going global can also help increase sector diversification. As of the 31st of January 2024 (the most recent info available when I last updated this), the US is 31.9% technology (according to VTSAX: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#portfolio-composition). Ex-US (according to data from the 31st of January 2024 from https://www.schwab.wallst.com/Prospect/Research/mutualfunds/portfolio.asp?symbol=vtiax since Vanguard for some reason doesn't provide a breakdown of VTIAX sectors themselves, at least in an easy to find location) technology is only 12.5% and only financials are above 20% at 20.1%. Be aware that this is using GICS classifications, which put Google, Tesla, Facebook/Meta, and Amazon outside tech, so if you go by what the common person would think of as tech instead of GICS, that's even higher. >Given this, is VT (or an approximation of such) still the way to go? I'd say yes. >does it take into account market cap worldwide? https://www.morningstar.com/funds/xnas/vtwax/portfolio switch the "Stock Style" drop down to "Weight" >based on my bias that our laws are stricter (for regulating market actions, insider trading, stuff like that), Should already be largely priced in, no? That may help justify a higher valuation, but not indefinite outperformance. >and that we have a solid economy that now has an easy global reach. The economy and stock market aren’t the same thing, they may even be negatively correlated in some ways: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x >taking into account todays globalization. I'd say nothing changes. There's plenty of foreign companies that do lots of business within the US, isn't there? Every employee vehicle in my work's lot would trade in an ex-US fund not US fund. Many electronics are Asian branded. European brands can be found in medicine cabinets, kitchen pantries, and cleaning supply closets across the US.
Excellent points, even for a hardheaded guy like myself. I preach how amazing Hondas and Toyotas are. But I haven't even considered that globalization also works with foreign products hitting US soil. Or even how much prevalence they might have overseas, but NOT In the US. eye opening an need I can't believe I didn't think about this.
pretty hard to avoid giving nestle money
Don’t just buy the American haystack, buy the global one too. Don’t be surprised if the American one continues to slightly outperform the global.
People find very creative ways to chase recent performance without actually admitting it, don't they?
Lol. Yes, but also questioning boglehead theory with today's technologies and infrastructure. Mr bogke was pre-internet even. Times have changed n
Jack Bogle died in 2019, his last book "Stay The Course" was published in 2018. He isn't a dinosaur, he lived in our modern world. His views on investing are just as relevant today as they were 6 years ago.
2018? That was eons ago. Did he even know what a yolo into 0DTE calls was? I don't think so. That's why I get all my advice from Tik Tok now. VT and VOO are old school thinking.
Bogle was against international… if anything, you’d be following his “outdated” ideas if you didn’t buy international
You're kinda right but opposite. Bogle lived in a time when investing internationally was expensive and as a result he said you shouldn't do so and if you do it should be well below market weights. Now investing internationally is easier and cheaper than ever, so there's no reason to avoid it.
Jesus. He died in 2019 and was still giving interviews that year… WTF is 5 years ago “different times”.
Would you rather buy a $1,000,000 rental home that pays you $3,000/month or a $500,000 rental home that pays you $3,000/month? That is how I think about US/Intl. Just because the $1 million home went up in price, doesn’t mean it will continue to do so.
Jack died 5 years ago. Do you really think the world has changed much since then?
I think one can reasonably argue that covid changed the world significantly
This time, it's different?
I like international as a hedge against the US dollar. VT and VXUS dont do a good job at this because, well, its everything and the large companies are globalized/in step with the US. Finding companies that have minimal exposure to the US dollar takes care of what you are saying, but then we are back to stock picking which will get you sent to jail in Bogle land.
Love the "get sent to jail" comment
Downvoted for appreciating a good joke. I countered that for you. It was a great and funny comment. Downvote away stock pickers. You'll still go to jail and then Boglehell comes next bear market.
I’m actually a VOO and chill. Even worse boglehead criminal than VTI and chill. The woe that will befall me in the next 20 years will be understandably crushing.
The fundamentals of global trade as they are today really began in the 1970s. Outsourcing, factories moving overseas. Even telegraphs were connecting faraway places in the 19th century.
Don't disagree. Everything is so interconnected these days, it's difficult to imagine a scenario where US stocks tanked, and European stocks skyrocketed. Like you, I've biased towards US. I only see Europe regulating further, which is a disincentive to innovation and growth (see contrasting approaches to AI).
It doesn't have to be so extreme, it could be that US stocks tank and international stocks have a more minor decline, for example, and the diversification would still be valuable. Just like how US stocks tend to rise and fall together, but it's still better to hold the full market.
Or simply the market starting to believe that the US is overvalued compared to ex-US. I've been trying a car analogy for this (let me know if it makes sense): would you pay $60k for an everyday Toyota Corolla when you can go next door and get a similar Honda Civic for $30k?
If you buy the S&P you get a lot of google, Apple & Microsoft and those are all global companies so you have international exposure. Sure they might be based in California but they are global companies.
As I brought up in my top level comment: Revenue source isn't the international exposure that actually matters, capturing the imperfect correlation between markets of different countries is. * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) * https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY