Investing - Theory, News & General • International (Non-US) versus US Equities (The "Arguments")

In simple terms:
1. The current US equities landscape is nothing like 2000 or 2008. We are no where close to “bubble” territory.

Each "landscape" is different, but if we are being objective about valuations, we are currently at the third highest level in history at a CAPE of around 35. Significantly more expensive than 2008, and just shy of 2000.

A high valuation doesn't say anything about whether we're in a "bubble" if a "bubble" is defined as a market that eventually corrects. A level of high valuations where valuations don't continue increasing will likely mean returns much less than historical average even if there is no sharp correction.

2. The tech concentration is not a risk given how solid the fundamentals of those companies are.

Company fundamentals change. What is once solid, may not be as solid, and fundamentals don't need to collapse in order for a significant re-rating. Part of any technological cycle involves an initial phase or larger than normal returns/margins followed by a normalization as that gets integrated into the larger economy. Less margins = lower valuations = headwind for a large driver of returns we've seen the last decade.

This bull market has completely clouded the inevitability of cyclicality in this space. It still exists. It always does.

3. The diversification benefits you get from ex-US investing are overrated and you will do just fine with staying invested in VTI.

The diversification benefits of anything are overrated until you actually benefit from them occurring in your portfolio. Problem is, you will never know to what duration and precise timing those benefits will matter.

I don't know why anyone with the perspective of "exUS is terrible and will never be a good diversifier due to lack of big tech" would invest in the US TSM where 90% of the market has done poorly relative to the 10% that has driven most of the returns. Look under the hood of US stocks, and you will be disappointed with the vast majority of them. But we don't invest in a way that breaks them up, so these concerns are "hidden", unlike the performance of VTI vs VXUS where it's more apparent.

Why would I care about that? So what if one basket is giving me extraordinarily returns and another is doing poorly? I invest in an index and look at the total returns. What one stock is doing relative to the other is not my concern.

This post epitomizes the “coming up with historical academic arguments” that I mentioned above to support whatever bias you might have & focus on being proven right than make money.

90% of the US market has done poorly, and 10% are driving all returns...it is claimed. Let's do look under the hood of US stocks.

US small and mid caps have done "poorly" but still trounced international.

US value stocks do not include any of the high flying tech stocks and has an overall composition similar to international, and it has still trounced international.

https://www.portfoliovisualizer.com/bac ... S4S9cIRMWj


You cannot argue with someone that insists on using their own set of facts. You are correct, this argument is liking nailing jello to a wall. This thread has the same very vocal minority screaming international across thousands of replies. Meanwhile the US crowd is too busy not being filled with regret and trying to convince others they are right based on tomes of academic papers and statistical analysis that all mean nothing at the end of the day.

You aren’t arguing facts; you’re cherry picking asset classes and dates

You seem to be confusing the last 15 years and making the mistake of extrapolating into infinity

Statistics: Posted by ez_mode — Wed Jul 03, 2024 9:11 am — Replies 6200 — Views 1610445