Diversify away from the US?

[adamu]

Rakutens VT wrap (despite cost) it still the best pick if a total world portfolio is preferred.

You can buy VT directly (just not in the Tsumitate portion or iDeCo). You'd have exchange costs and trading fees when buying/selling, and it pays out the dividends rather than reinvests. Does Rakuten do anything to avoid paying US CGT on the full dividend amount?

https://retirewiki.jp/wiki/Japanese_glo ... th_US_ETFs

That's a given, but I wouldn't recommend it for most people. Too many tradeoffs with ETFs.

True, but I also think most people would be better going for a decent well packaged fund (eMaxis slim) than a comprehensive but poorly packaged one (Rakuten).

[banders]

Stupid question maybe, but isn't All Country allocated according to global equity ratios? If the US market is no longer 60% (or whatever it currently is), wouldn't the US allocation be adjusted accordingly?

[adamu]

That's right. What the article is saying is that maybe you can anticipate that in advance and do better than the market. But that's just a form of timing the market.

[RetireJapan]

That's right. What the article is saying is that maybe you can anticipate that in advance and do better than the market. But that's just a form of timing the market.

Well, it's actually making a distinction between market cap and net income generation (the follow up article talks contrasts with GDP). I don't think it is something most people need to worry about though. Just thought it was an interesting perspective.

[Deep Blue]

Well, it's actually making a distinction between market cap and net income generation (the follow up article talks contrasts with GDP)

It's suggesting to allocate less to US equities as they are "expensive". Unfortunately following this advice any time over the past decade would have been incredibly negative for your portfolio returns as US equities have consistently been more expensive than any other region in the world. And they have consistently kept outperforming.

Will the next decade be the same or different?

I have no idea, and neither does the author of the article. I doubt anyone on this board does either..... which is why we index so we don't have to try and predict the future and chop and change between sectors, styles or countries.

[Tsumitate Wrestler]

Well, it's actually making a distinction between market cap and net income generation (the follow up article talks contrasts with GDP)

It's suggesting to allocate less to US equities as they are "expensive". Unfortunately following this advice any time over the past decade would have been incredibly negative for your portfolio returns as US equities have consistently been more expensive than any other region in the world. And they have consistently kept outperforming.

Will the next decade be the same or different?

I have no idea, and neither does the author of the article. I doubt anyone on this board does either..... which is why we index so we don't have to try and predict the future and chop and change between sectors, styles or countries.

It is relevant to those who are not internationally diversified, and need to reexamine their allocations. A 100% US allocation is still very common. Although, there are stronger arguments for doing so then made in this article.

[adamu]

That's right. What the article is saying is that maybe you can anticipate that in advance and do better than the market. But that's just a form of timing the market.

Well, it's actually making a distinction between market cap and net income generation (the follow up article talks contrasts with GDP). I don't think it is something most people need to worry about though. Just thought it was an interesting perspective.

It is still a market timing argument though

What interests me is that with the US being the global power, all the institutions are based there or at least influenced by it. If there is genuinely a shift away from US dominance, I think we're probably going to have to do more than let funds rebalance. Who knows what that'll be though - especially if the replacement is not a capitalist system.

[RetireJapan]

It is still a market timing argument though.

I'm not sure it is. It is claiming that the assumptions underlying the indices might not reflect reality or an optimal asset allocation. That is not market timing, but rather asset allocation.

[Tsumitate Wrestler]

That's right. What the article is saying is that maybe you can anticipate that in advance and do better than the market. But that's just a form of timing the market.

Well, it's actually making a distinction between market cap and net income generation (the follow up article talks contrasts with GDP). I don't think it is something most people need to worry about though. Just thought it was an interesting perspective.

It is still a market timing argument though

What interests me is that with the US being the global power, all the institutions are based there or at least influenced by it. If there is genuinely a shift away from US dominance, I think we're probably going to have to do more than let funds rebalance. Who knows what that'll be though - especially if the replacement is not a capitalist system.

Do you think people said the same thing when Japan stocks dominated the international stock market in the bubble days? It was 45% of market back then.

Please forgive the source: https://www.foxbusiness.com/markets/14- ... -from-1989

[Deep Blue]

It is still a market timing argument though.

I'm not sure it is. It is claiming that the assumptions underlying the indices might not reflect reality or an optimal asset allocation. That is not market timing, but rather asset allocation.

There are plenty of ways to create indices, and there always have been. Using market weights has been pretty standard practice for decades, there are only a few archaic price weights indices still in common use - Nikkei-225 and Dow Jones for example.

I think it’s fine to debate index composition but that guy is using a the fact the companies are expensive to justify it rather than any of the potentially more valid arguments.

It’s straight up market timing.