it’s still reassuring to see that most of the triangle is very green, though.
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Also reassuring is that the longer the investment period, the more it gets towards a stable 6-8% range. Already at 25y the minimum is 5.5%.
Would be nice to see inflation adjusted numbers, although it is not a big issue with CHF. I mean Pictet data.
What’s your allocation MSCI World vs MSCI EM IMI? ACWI is, if I’m not mistaken, around 88:12.
And Russia was 2% of MSCI EM anyway. So you’d only need to think about China.
Personally I’m not adjusting anything. I continue with my strategy of slightly overweighing EM as I expect those regions to have a large potential in the future.
NZZ recently wrote (not paywalled) that with a globalized economy there’s not much diversification in buying EM, as they’re so closely interlinked with the “developed” world.
Strictly speaking you’re not harming anybody.
No money flows to the companies when you’re buying their stock on an exchange market. With the exception of IPOs and capital increases.
Again strictly speaking, it’s impossible for everyone to sell their stock. Who are they selling to?
But yes, if mostly everyone suddenly wants to sell the stock, the price collapses, trading stops once there are no more buyers, and capital markets are not a viable financing option…
My grief with EM is that many of their markets aren’t really mature and I don’t feel that, as a foreign investor (and even more so as a retail foreign investor with no political/economic leverage to speak of), my co-ownership of EM domiciled companies is guaranteed. My example would be China, where, as foreigners, we wouldn’t actually be buying stocks in the companies we want to invest but rather in shell companies listed on other exchanges.
I have the same concern for bonds: if things go south, I expect China to default on bonds held by foreign investors before defaulting on domestically held ones.
Exactly my thought. My solution is however a total market strategy: MSCI EM IMI or at least MSCI EM in a global capitalization weighted portfolio. Even if China goes to zero, it would mean a 7% hit, less than Apple + Amazon + Microsoft 
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I stay the course:
- Developed World 58.63%
- EM 20.65%
- CH 20.72%
Portfolio would be considerably higher had I put all in Vanguard All-World since the beginning…
65% US
14% CH
11% EM
10% Rest
I have been writing Covered Calls for the last 2 years, but was not able to outperform the market (like 90% of all investors).
I am thinking of 80% VOO and 20% UBS SMI ETF, or everything in VT.
Any thoughts?
What’s the index in VOO?
If a Swiss index then not SMI, it’s not very diversified.
Might want to add some SPI Extra to counterbalance NESN, ROG and NOVN.
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S&P500
(20 characters)
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My thinking is mostly (Fundsmith and) VOO as well.
- Europe is looking into a recession
- Emerging markets will have super high inflation and less discretionary spending due to food shortages as Russia falls out
- US will benefit from LNG sales to the EU as well as the replenishment of the NATO stockpiles that are now gone into Ukraine
- China might get a hit if it takes side with Russia (+ evergrande & co mortgage bubble)
- Asia might get a hit if China starts to play imperialism again (think Taiwan)
- bond market is and will be useless for a while
SP500 has outperformed historically over the years. I don’t see why it wouldn’t do it again.
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One could think it’s bound for mean-reversion?
You have to consider that it’s always relative to what is already priced in. The ex-US economy doesn’t have to perform better than the US to get a better performance from ex-US stock than US stock. It’s sufficient if e.g. US companies can’t meet their (very high) market expectations while ex-US companies meet their (lower) market expectations.
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I have no clue what’s going to happen. The US has its own issues. I just threw out there a reason we could use in hindsight to justify a future underperformance of the SP-500.
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you can assume that everything’s already priced in, unless you think you’re smarter than the market.
Also the not-reaching-the-extreme-expectations is also priced in already.
Recursion: see recursion. 
I would think the mean-reversion is happening on the next crash, which might come down to the 200MA of the SP500 (to around 3500 points), that’s a 20% drop, not the end of the world.
US only (MSCI USA) is outperforming the world (MSCI World) since 2012. It has under-performed from 2004 to 2011 and with a very small exception, from 1972 to 1998, so the World has beaten US only for quite a good period of time:
There is no guarantee that US only will outperform in the future. There are plenty of promizing companies in the East. Switzerland (iShares MSCI Switzerland - EWL) has outperformed US only (SPY) from 2006 to 2014 and could do it again: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=EWL&allocation1_1=100&symbol2=SPY&allocation2_2=100
More importantly than that, I wouldn’t invest in the US only as a swiss investor because if something bad happens in the US/to US companies, the US governement is likely to protect US investors but may not have the ability to extend that protection to foreign investors. To me, inter-countries diversification is to handle the tail risk of one country’s whole stock market going awry, which isn’t likely but would be devastating if it happened and an investor was invested in that market solely.
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