RetireJapan

Found this blog post extremely interesting: https://mailchi.mp/verdadcap/the-great-rotation

TLDR: A potential unwinding of hyper-concentration in the US may favor balanced global portfolios.

The author could have made the same argument any time over the past decade or more. It’s just trying to time the market, ultimately just noise. Index or try to chop in and out and call the top/bottom of country/style/sector outperformance - I know which strategy I’m backing for the long term.

Here is a 2019 piece making the arguments tech is overvalued and citing Tesla as an example. I even agree with the points Arnott makes and did at the time. I thought Telsa was a massive bubble and would go bankrupt.

https://www.researchaffiliates.com/publ ... nd-trouble

Telsa is 400% since then.

You can find hundreds of thousands of articles or papers making the same points…. So far anyone following that advice has missed out on a monster bull market in large cap US tech stocks.

Deep Blue wrote: ↑Sun Sep 29, 2024 2:49 am The author could have made the same argument any time over the past decade or more. It’s just trying to time the market, ultimately just noise. Index or try to chop in and out and call the top/bottom of country/style/sector outperformance - I know which strategy I’m backing for the long term.

Considering Ben's holdings, this seems intended as a warning for those who are only in American equities. Lots of people these days who are "indexing" but chasing gains with the likes of VQT, QQQ, and strangely in Japan the DOW remains popular.

I worry about those folks more than the S&P500/VTI crowd.

MSCI ACWI is still the best set and forget option here, but I would really prefer a low-cost VT/FTSE All Cap tracker. However, it is one hell of a lot of work to handle 5000 addition stocks for the same relative performance. Also, I think FTSE is more expensive to licence, but I've never really been clear on how that side of the business works.

Tsumitate Wrestler wrote: ↑Sun Sep 29, 2024 4:04 am Considering Ben's holdings, this seems intended as a warning for those who are only in American equities. Lots of people these days who are "indexing" but chasing gains with the likes of VQT, QQQ, and strangely in Japan the DOW remains popular.

I worry about those folks more than the S&P500/VTI crowd.

MSCI ACWI is still the best set and forget option here, but I would really prefer a low-cost VT/FTSE All Cap tracker. However, it is one hell of a lot of work to handle 5000 addition stocks for the same relative performance. Also, I think FTSE is more expensive to licence, but I've never really been clear on how that side of the business works.

I am 90% all-country, so not planning to make any changes based on this. Not aware of any world ex-US funds easily available in Japan, so the only easy option to address this issue would be to add emerging markets or Japan funds to the mix I guess.

RetireJapan wrote: ↑Sun Sep 29, 2024 7:18 am

Tsumitate Wrestler wrote: ↑Sun Sep 29, 2024 4:04 am Considering Ben's holdings, this seems intended as a warning for those who are only in American equities. Lots of people these days who are "indexing" but chasing gains with the likes of VQT, QQQ, and strangely in Japan the DOW remains popular.

I worry about those folks more than the S&P500/VTI crowd.

MSCI ACWI is still the best set and forget option here, but I would really prefer a low-cost VT/FTSE All Cap tracker. However, it is one hell of a lot of work to handle 5000 addition stocks for the same relative performance. Also, I think FTSE is more expensive to licence, but I've never really been clear on how that side of the business works.

I am 90% all-country, so not planning to make any changes based on this. Not aware of any world ex-US funds easily available in Japan, so the only easy option to address this issue would be to add emerging markets or Japan funds to the mix I guess.

For those that are 100% American stocks, they can add the Rakuten VXUS wrap or XVUS directly.
https://www.rakuten-sec.co.jp/web/fund/ ... 90C000P228

For those that are disappointed by Emaxis Slim All Countries/MSCI ACWIs lack of Microcraps, there are again options that wrap US etfs. However, it is not worth it in my opinion due to the fund cost. Rakutens VT wrap (despite cost) it still the best pick if a total world portfolio is preferred. *

I went all country as I think the cost difference is more important in the long run.

*{MSCI ACWI only has 3000+ Large/Mid cap stocks vs FTSE ALL CAPs 8000+ small/mid/large cap stocks.)

Tsumitate Wrestler wrote: ↑Sun Sep 29, 2024 4:04 am...However, it is one hell of a lot of work to handle 5000 addition stocks for the same relative performance. ...

It's been a while, but doesn't vanguard use some kind of statistical modeling to mimic the performance of those 5000, rather than actually holding them all?

captainspoke wrote: ↑Mon Sep 30, 2024 1:08 am

Tsumitate Wrestler wrote: ↑Sun Sep 29, 2024 4:04 am...However, it is one hell of a lot of work to handle 5000 addition stocks for the same relative performance. ...

It's been a while, but doesn't vanguard use some kind of statistical modeling to mimic the performance of those 5000, rather than actually holding them all?

Absolutely they use modelling, but I think their actually holding are around 10,000 currently? Microcaps really inflate things.

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

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.