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Re: Diversify away from the US?
Posted: Mon Sep 30, 2024 8:16 am
by adamu
Tsumitate Wrestler wrote: ↑Mon Sep 30, 2024 3:11 am
adamu wrote: ↑Mon Sep 30, 2024 3:02 am
Tsumitate Wrestler wrote: ↑Mon Sep 30, 2024 1:05 amRakutens 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).
Re: Diversify away from the US?
Posted: Mon Sep 30, 2024 11:35 am
by 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?
Re: Diversify away from the US?
Posted: Mon Sep 30, 2024 11:43 am
by 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.
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 1:56 am
by RetireJapan
adamu wrote: ↑Mon Sep 30, 2024 11:43 am
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.
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 2:06 am
by Deep Blue
RetireJapan wrote: ↑Tue Oct 01, 2024 1:56 am
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.
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 3:09 am
by Tsumitate Wrestler
Deep Blue wrote: ↑Tue Oct 01, 2024 2:06 am
RetireJapan wrote: ↑Tue Oct 01, 2024 1:56 am
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.
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 3:22 am
by adamu
RetireJapan wrote: ↑Tue Oct 01, 2024 1:56 am
adamu wrote: ↑Mon Sep 30, 2024 11:43 am
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.
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 4:59 am
by RetireJapan
adamu wrote: ↑Tue Oct 01, 2024 3:22 am
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.
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 5:08 am
by Tsumitate Wrestler
adamu wrote: ↑Tue Oct 01, 2024 3:22 am
RetireJapan wrote: ↑Tue Oct 01, 2024 1:56 am
adamu wrote: ↑Mon Sep 30, 2024 11:43 am
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
Re: Diversify away from the US?
Posted: Tue Oct 01, 2024 5:53 am
by Deep Blue
RetireJapan wrote: ↑Tue Oct 01, 2024 4:59 am
adamu wrote: ↑Tue Oct 01, 2024 3:22 am
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.