To be honest I think the question for you is do you believe in home bias or not.
It doesn’t have to work always in your favour but results and belief are not same
1 Like
I wonder how it would help you. When dot com bubble deflated, exUS did indeed better than the US market. But only a little bit better.
I pondering if we get CAPE / Euro-US exchange rate above 40, may be it would be the time to divert new money from VT to payng of the mortgage.
1 Like
Jp morgan 2025 Long-Term Capital Market Assumptions
Yea that’s a bit the question. But a little already helps. Also teh valuation difference between US/ex-US is wayy bigge rthen during dotcom today. So if AI is a bubble, that bubble will pop in US only, as AI valuation craze is non-existant in ex-US esentially. A more valuey approach could help as well.
Anyway the diffference will be marginal. If I’m 60 or 50% US won’t make a crazy difference either way. But may help psychological. My big managed futures positions shoudl hedge against that anyway as well already. I’m essentially 80% stocks + 80% diverse managed futures funds at this point.
2 Likes
My so hard bought VT shares via the option route kill any ideas to tinker with the portfolio.
One day you understand that SPX is the best invention after the sliced bread and its going to outperform anything and everything, the other day you look at it and oh my, it’s f*cking expensive, it’s going to crash or we get lost decades in a row.
But then you look at the modest VT and realize you hedge all the bets on the equity side. And you go on to your daily business.
4 Likes
How do you get this? Looked up your old comments in the MF thread, but couldn‘t find it.
A combination of stacked funds like RSST and margin loan.
1 Like
I think VT works fine in terms of diversity.
But for me more than 60% exposure to one country is a big concentration risk specially with type of leadership the country have
Having said that, it’s not like I can go below 50% anyways because of such a large investible market.
What’s wrong with having 60% of equity in companies that are domiciled in the US? It does not mean 60% exposure to one economy, it’s exposure to their legal system.
1 Like
My reasons are following
-
Valuations are very much driven by domicile because local investors tend to behave very similarly. So there we have dependence on how the people and investors value companies in the region.
-
Actions (good or bad) by governments drive the sentiment of whole market in the region.
-
Since I mainly use index funds, 62% investment in US, also means a very high concentration on top 10 US companies
Hence for risk mitigation purposes I kept my US allocation to 50% max for equities. To be honest , it’s still too high but since rest of the world have less number of public companies, it’s tough to reduce US exposure to 25%
Yes, there is a discussion in the Rational Reminder community about this topic. Mike Green pushes these ideas, but there is no strong academic evidence to substantiate them. The ERP puzzle is still pointing out that the stocks are cheap.
No guarantees.
Nothing, except that it leaves less than 40% for the rest of the world. I only recently updated my old 50% allocation to 60%. But yeah, more or only US only would have run better.
This opinion nails it: " Should investors just give up on stocks outside America?
No, but it is getting a lot harder to keep the faith" 
Here’s a chart from it US vs. Europe:
Either way, in sum 2024 is going well, so far. Just three more consecutive years with +30% and the thread’s title delivered, as well 
I think this would only get corrected in a crisis. For example AI companies failing to deliver value, a recession in US or something very serious like GFC.
Until then, recency bias and US centric investment philosophy deployed by US investors as well as international investors would keep the divergence going. As this basically feeds on itself
1 Like
The WSJ ran a similar article y’day – A Quarter of Your Retirement Fund Just Isn’t Keeping Up – written from a US perspective.
(even the charts are similar, this must be the same journalist who WFH for both newspapers … )
We can make a similar chart to compare other sectors of US too. And of course if Mag 7 had an ETF long time back, then the headline would have been 70% of your portfolio is not working for you.
(assumed dividend re-invested)
2 Likes
Agreed, even on more levels. The top universities, skilled workforce in some sectors, the local market, and yes, the access to capital for anyone with a good idea. Will be interesting to look back in 10 or 20 years and see if they can keep it up, or rather how other regions can keep up.
Maybe I’m biased, since Economist and Blick online are my main source of trustworthy, quality news, but it sometimes feels like even other reputable news outlets wait for their weekly copy and then go from there…
2 Likes
All US Media does is praise US. And European media is only criticizing Europe. This also makes a difference.
This TDLR report is quite interesting
I still remember, first time i was in US was during GFC period. And all I could hear on News was “we have hit the bottom and future is bright”
2 Likes
These indices typically dont include dividends.
The euro stoxx probably does not look as bad, if you include those.
Maybe …
This chart from the linked WSJ article above shows cumulative returns:
Still doesn’t look pretty for ex-US.
2 Likes
