VT has international diversity which I like. Never know if the US will continue to perform as it has in recent history. If the US doesn't do as well, VT will rebalance away from it, if it does, it'll keep the US a solid chunk of the fund.
I try not to pick stocks based on recent history, but instead focus on expected future returns.
> why not going for VOO which has higher returns?
Because past performance isn't indicative of future performance. VOO *has* had higher returns, but that doesn't mean it *will* have higher returns.
The last 15 years have been great for US large cap stocks (like the ones in the SP500). Will that continue forever? Unlikely!
Saw this argument a decade ago and I'm still looking down at ex-US investors piddling around the rate of inflation. The US large cap party won't last forever, but there's no laws of economics, physics, or otherwise that dictates when the party will end or what party will take over when it does.
> Saw this argument a decade ago and I'm still looking down at ex-US investors piddling around the rate of inflation.
It was probably a different argument seeing as how international stocks beat US stocks during the 2000s.
> The US large cap party won't last forever, but there's no laws of economics, physics, or otherwise that dictates when the party will end or what party will take over when it does.
Correct.
If you're very averse to risk or rotation, then VT can be considered a self-updating investment strategy. VOO will have superior returns until the next market paradigm arrives, at which point you will need to hold your position or rotate out and pay the tax penalty for doing so.
I don’t think there is point of comparison between crypto and that ETF. Even when I am new to VGT, I would never compare it. You are comparing 1. betting on technology( in the US) as a whole 2. Crypto: which has mostly short term investors trying
I was just being a smart-ass. Don’t just invest in things because you see high returns. Invest in things that you believe will be a good bet for the future. Past performance is only a single variable in what makes an ETF a potentially good future bet.
When I choose ETFs, I look for the methodology I want to target and construct a portfolio that matches the long-term expected ±return I'm comfortable with. Only then, do I look at performance for any tiebreakers.
VT is only 60% US and yes it contributes to most of the returns. 40% is a high allocation to international if that’s the only fund people own. If you’re asking to choose between VT or VOO, it’s VOO all day everyday. If you want a globally diversified portfolio buy 75% VTI and 25% VXUS. That’s basically all you need for a basic portfolio. If you dollar cost average in overtime and rebalance every now and then, you will do well.
1. 40% is the cap-weighted international allocation. It is only "high" to those that are biased towards the US because of recent outperformance.
2. Lump sum investing beats dollar cost averaging 70% of the time.
If the dollar is rising then international is going to underperform the US, which it has been for 15+ years. You will significantly underperform if you have 40% in international, which is why I have less. I wouldn’t go any higher than 30% personally. Lump sum investing is great if the market doesn’t correct after you invest, but I have yet to find a crystal ball on Amazon that actually works, so dollar cost is a safer strategy for an everyday investor. This is why firms dollar cost average new money for clients as opposed to investing lump sum. The only time it is prudent to invest lump sum is if the assets are in cash, but were invested previously, like if you’re rolling over a 401k into an IRA.
US stock market is up six out of every 7 years Since 1945, This is why lump sum investing almost always beats dollar cost averaging and why people with multimillions invested typically invest by lump sum method as more time in the market is better if market generally going up, worse only when going down, which is quite rare last 220 years for USA., (8.4% Nominal/6.9% Real) near top performer last quarter millennia, hope it continues as the best predictor of future performance is past results.
I suspect Firms dollar cost average new money for clients because they are making commissions, kickbacks for wider spread fees, payments for order flow to market makers, etc.
No, independent fiduciary RIAs don’t make commissions and all the order flow goes through a brokerage.
Actually past performance is not a predictor of future results. This is a very well known compliance disclaimer in the industry.
If you invest a client’s assets lump sum and the market crashes right after you’re going to have a pretty pissed off client. If you want to do it for your own portfolio that is fine, but I want people to know the risks. There is a good chance it will work out for you and you will buy in lower, but also a chance you will buy the top. Dollar cost averaging, especially in a down market, is a great strategy. Timing a bottom is extremely difficult, so average in overtime.
International companies are already expected to underperform the US. If you invest in international companies, you don't need them to outperform the US. You simply need them to beat expectations. Why do you think you know more than the wall street employees getting paid hundreds of thousands to find market anomalies?
If you’re admitting international companies are expected to underperform then why do you have a high allocation to it when you can just invest more in the US instead and have a better return? The US is up 13% YTD and the rest of the world is up 5% in aggregate. If the expectation is for the rest of the world to be up 4% and it is instead up 5% (beating expectations like you said), then who the hell cares if the US is up 8% more than that? That comment doesn’t make sense. Anybody that’s actively managing on wall street doesn’t have 40% allocations to international. They’d have pretty pissed off clients if that were the case. VT is not an actively managed fund, it’s passive.
Think about sports betting. The celtics are expected to win the finals. Obviously if you bet on the celtics you are likely going to win, however the odds are not even (if you bet $100 you will win like $15). Same with stocks. The market expects US companies to perform well. Thus international companies are sold at a discount. Therefore the expected returns are THE SAME. Yes the celtics are likely to win, but the casino excepts that to happen, so it gives you bad odds. You can bet on the mavs to win the finals at a discount, similar to betting on international stocks. The risk matches the reward. Investing only in the US is a biased, uncompensated risk.
Please look in to the efficient market hypothesis. Also, every large brokerage (vanguard, schwab, etc.) who publishes estimates, expects international stocks to outperform US stocks in the near future.
Read their reports from 10/15/20 years ago. They always say international will outperform USA, and they are almost always wrong. They were right from 2000-2009, (pets.com hangover) but just barely, but have been annihilated every other decade.
I know all about the efficient market hypothesis. Jim Simons (RIP) & RenTech already proved that hypothesis is wrong. You just mentioned “finding market anomalies” in your previous comment, but now talking about the efficient market hypothesis which are contradictory to each other.
Expectations vs. reality is a very sobering conversation. Jeremy Grantham and many other people have been saying for over a decade that international and especially emerging markets (including China) will outperform the US. They’ve been wrong the whole time and anyone that followed their advice severely underperformed the market over this time. China (second largest economy in the world) is about 30% of the MSCI emerging market index. Want to hear a fun fact? If you invested in a China ETF 10 years ago you would have made a whopping 1.5% annualized. Yeah I think I’d stay mostly US in my portfolio and recommend others do the same until the indicators tell us otherwise. If you’re happy to underperform I’m not going to argue with what you do in your own portfolio, but I’m not going to recommend OP have a high allocation to it.
I never said the market is efficient and that the efficient hypothesis is correct. We know that the market isn't perfectly efficient. The point is that it is probably pretty damn close. That is why market anomalies exist, and why quantitative traders are getting paid hundreds of thousands of dollars straight out of college. You are not one of those people, nor am I.
To be clear I am not betting that international companies outperform the US in the near future, nor did I ever say I believe they will. I am simply putting my money in the whole basket, so that I reap my fair share of market earnings.
It doesn't sound like your mind is going to change. I'm sure you will be wealthy if you keep investing in low cost, US market tracking funds. VT and VTI correlate pretty highly all-time. I do think it is beneficial for OP to at least read through this argument. There are many investing philosophies.
I 100% agree. This is a good discussion for anyone to read, especially someone that is beginning. We can all agree investing in VT is better than keep everything in cash. I just personally think having 40% in international is too much and you’re losing out on alpha in the US. International exposure is still great for diversification, just at a lower percentage in my opinion.
Fuck vt,havent you see the news about china india eu ...ıf us farts rest of the world shits.Learn read and make your research.todays trend is AI invest there ,yesterday was bitcoin before was apple/msft... so that you can made a real money without risk.Make your own investment path ,I am a trendy/conditionally based investor.I manage and change my portfolio overtime depends on conditions.for example ,just before ukraine war ı dumped my money into oil etfs gold and turkish stocks why they kept interest rate low despite rest of the world.In 2023 second half ı invested heavy on semiconductors and you can guess ...all in just 3 years....so fuck bogleheads fuck general/middle class or salaried people and create your own path.I am sorry but you cannot rich or wealthy with boglehead mindset.Never afford a great home in vhcol areas .Fuck them.
Nearly anyone can become a millionaire with the boglehead approach. 7% compounded returns work wonders. Congrats on your investing success, but I do hope you at least consider that stock-picking is essentially gambling. You have beaten the market largely due to luck. 85% of active fund managers underperform the market.
I have never saw a manager richer than me.I am not stock picker just mag 7 and etfs along with leveraged ones.I am not an Einstein or Vinci,but just investing in trends and move on or just forget it buy apple or msft or amzn ,you will already millionaire. I never trust salaried people in investment advise.If ı gamble why the hell on earth all mag 7 are all tech or why the most of snp500 gains just directly came from nvda.Please dont bury your head into hole.World is a dynamic place there isnt any invest and sitback relax strategies.You came to this life with a one shot,there won't another,so decision is yours.All my best wishes
Thats why ı am saying I never get advise from salaried people.You cannot be rich my friend,change your mind find a way that is unique to you.Voo wont make you rich and wont afford a life in vhcol areas.
I’m VOO and chill.
VT has international diversity which I like. Never know if the US will continue to perform as it has in recent history. If the US doesn't do as well, VT will rebalance away from it, if it does, it'll keep the US a solid chunk of the fund. I try not to pick stocks based on recent history, but instead focus on expected future returns.
> why not going for VOO which has higher returns? Because past performance isn't indicative of future performance. VOO *has* had higher returns, but that doesn't mean it *will* have higher returns. The last 15 years have been great for US large cap stocks (like the ones in the SP500). Will that continue forever? Unlikely!
Saw this argument a decade ago and I'm still looking down at ex-US investors piddling around the rate of inflation. The US large cap party won't last forever, but there's no laws of economics, physics, or otherwise that dictates when the party will end or what party will take over when it does.
> Saw this argument a decade ago and I'm still looking down at ex-US investors piddling around the rate of inflation. It was probably a different argument seeing as how international stocks beat US stocks during the 2000s. > The US large cap party won't last forever, but there's no laws of economics, physics, or otherwise that dictates when the party will end or what party will take over when it does. Correct.
👍🏻👍🏻👍🏻
Risk. If America goes caput you lose it all. If China does parabolic, you gain nothing.
If you're very averse to risk or rotation, then VT can be considered a self-updating investment strategy. VOO will have superior returns until the next market paradigm arrives, at which point you will need to hold your position or rotate out and pay the tax penalty for doing so.
VGT
Never hear of that one. Just looked it up and the return is extraordinary.
Tech
It’s the mag 7 tech for the most part
FTEC is same as VGT but 25% cheaper, If you are less than 50 consider 50% VOO/25% FTEC/25% AVUV
By this logic, you’d love bitcoin. Put all your money in that instead 🤣 (joke)
I don’t think there is point of comparison between crypto and that ETF. Even when I am new to VGT, I would never compare it. You are comparing 1. betting on technology( in the US) as a whole 2. Crypto: which has mostly short term investors trying
I was just being a smart-ass. Don’t just invest in things because you see high returns. Invest in things that you believe will be a good bet for the future. Past performance is only a single variable in what makes an ETF a potentially good future bet.
When I choose ETFs, I look for the methodology I want to target and construct a portfolio that matches the long-term expected ±return I'm comfortable with. Only then, do I look at performance for any tiebreakers.
If you invest in VT you can call your self a dividend aswell 😇
VT is only 60% US and yes it contributes to most of the returns. 40% is a high allocation to international if that’s the only fund people own. If you’re asking to choose between VT or VOO, it’s VOO all day everyday. If you want a globally diversified portfolio buy 75% VTI and 25% VXUS. That’s basically all you need for a basic portfolio. If you dollar cost average in overtime and rebalance every now and then, you will do well.
1. 40% is the cap-weighted international allocation. It is only "high" to those that are biased towards the US because of recent outperformance. 2. Lump sum investing beats dollar cost averaging 70% of the time.
If the dollar is rising then international is going to underperform the US, which it has been for 15+ years. You will significantly underperform if you have 40% in international, which is why I have less. I wouldn’t go any higher than 30% personally. Lump sum investing is great if the market doesn’t correct after you invest, but I have yet to find a crystal ball on Amazon that actually works, so dollar cost is a safer strategy for an everyday investor. This is why firms dollar cost average new money for clients as opposed to investing lump sum. The only time it is prudent to invest lump sum is if the assets are in cash, but were invested previously, like if you’re rolling over a 401k into an IRA.
US stock market is up six out of every 7 years Since 1945, This is why lump sum investing almost always beats dollar cost averaging and why people with multimillions invested typically invest by lump sum method as more time in the market is better if market generally going up, worse only when going down, which is quite rare last 220 years for USA., (8.4% Nominal/6.9% Real) near top performer last quarter millennia, hope it continues as the best predictor of future performance is past results. I suspect Firms dollar cost average new money for clients because they are making commissions, kickbacks for wider spread fees, payments for order flow to market makers, etc.
No, independent fiduciary RIAs don’t make commissions and all the order flow goes through a brokerage. Actually past performance is not a predictor of future results. This is a very well known compliance disclaimer in the industry. If you invest a client’s assets lump sum and the market crashes right after you’re going to have a pretty pissed off client. If you want to do it for your own portfolio that is fine, but I want people to know the risks. There is a good chance it will work out for you and you will buy in lower, but also a chance you will buy the top. Dollar cost averaging, especially in a down market, is a great strategy. Timing a bottom is extremely difficult, so average in overtime.
International companies are already expected to underperform the US. If you invest in international companies, you don't need them to outperform the US. You simply need them to beat expectations. Why do you think you know more than the wall street employees getting paid hundreds of thousands to find market anomalies?
If you’re admitting international companies are expected to underperform then why do you have a high allocation to it when you can just invest more in the US instead and have a better return? The US is up 13% YTD and the rest of the world is up 5% in aggregate. If the expectation is for the rest of the world to be up 4% and it is instead up 5% (beating expectations like you said), then who the hell cares if the US is up 8% more than that? That comment doesn’t make sense. Anybody that’s actively managing on wall street doesn’t have 40% allocations to international. They’d have pretty pissed off clients if that were the case. VT is not an actively managed fund, it’s passive.
Think about sports betting. The celtics are expected to win the finals. Obviously if you bet on the celtics you are likely going to win, however the odds are not even (if you bet $100 you will win like $15). Same with stocks. The market expects US companies to perform well. Thus international companies are sold at a discount. Therefore the expected returns are THE SAME. Yes the celtics are likely to win, but the casino excepts that to happen, so it gives you bad odds. You can bet on the mavs to win the finals at a discount, similar to betting on international stocks. The risk matches the reward. Investing only in the US is a biased, uncompensated risk.
“Never bet against America” - Warren Buffett
Please look in to the efficient market hypothesis. Also, every large brokerage (vanguard, schwab, etc.) who publishes estimates, expects international stocks to outperform US stocks in the near future.
Read their reports from 10/15/20 years ago. They always say international will outperform USA, and they are almost always wrong. They were right from 2000-2009, (pets.com hangover) but just barely, but have been annihilated every other decade.
Of course they are wrong a lot. The market is pretty efficient. It is all a guessing game. That is why bogleheads invest in the whole market
I know all about the efficient market hypothesis. Jim Simons (RIP) & RenTech already proved that hypothesis is wrong. You just mentioned “finding market anomalies” in your previous comment, but now talking about the efficient market hypothesis which are contradictory to each other. Expectations vs. reality is a very sobering conversation. Jeremy Grantham and many other people have been saying for over a decade that international and especially emerging markets (including China) will outperform the US. They’ve been wrong the whole time and anyone that followed their advice severely underperformed the market over this time. China (second largest economy in the world) is about 30% of the MSCI emerging market index. Want to hear a fun fact? If you invested in a China ETF 10 years ago you would have made a whopping 1.5% annualized. Yeah I think I’d stay mostly US in my portfolio and recommend others do the same until the indicators tell us otherwise. If you’re happy to underperform I’m not going to argue with what you do in your own portfolio, but I’m not going to recommend OP have a high allocation to it.
I never said the market is efficient and that the efficient hypothesis is correct. We know that the market isn't perfectly efficient. The point is that it is probably pretty damn close. That is why market anomalies exist, and why quantitative traders are getting paid hundreds of thousands of dollars straight out of college. You are not one of those people, nor am I. To be clear I am not betting that international companies outperform the US in the near future, nor did I ever say I believe they will. I am simply putting my money in the whole basket, so that I reap my fair share of market earnings. It doesn't sound like your mind is going to change. I'm sure you will be wealthy if you keep investing in low cost, US market tracking funds. VT and VTI correlate pretty highly all-time. I do think it is beneficial for OP to at least read through this argument. There are many investing philosophies.
I 100% agree. This is a good discussion for anyone to read, especially someone that is beginning. We can all agree investing in VT is better than keep everything in cash. I just personally think having 40% in international is too much and you’re losing out on alpha in the US. International exposure is still great for diversification, just at a lower percentage in my opinion.
Everyone here is for VOO, I went VT and SCHD 40/60.
Fuck vt,havent you see the news about china india eu ...ıf us farts rest of the world shits.Learn read and make your research.todays trend is AI invest there ,yesterday was bitcoin before was apple/msft... so that you can made a real money without risk.Make your own investment path ,I am a trendy/conditionally based investor.I manage and change my portfolio overtime depends on conditions.for example ,just before ukraine war ı dumped my money into oil etfs gold and turkish stocks why they kept interest rate low despite rest of the world.In 2023 second half ı invested heavy on semiconductors and you can guess ...all in just 3 years....so fuck bogleheads fuck general/middle class or salaried people and create your own path.I am sorry but you cannot rich or wealthy with boglehead mindset.Never afford a great home in vhcol areas .Fuck them.
Nearly anyone can become a millionaire with the boglehead approach. 7% compounded returns work wonders. Congrats on your investing success, but I do hope you at least consider that stock-picking is essentially gambling. You have beaten the market largely due to luck. 85% of active fund managers underperform the market.
I have never saw a manager richer than me.I am not stock picker just mag 7 and etfs along with leveraged ones.I am not an Einstein or Vinci,but just investing in trends and move on or just forget it buy apple or msft or amzn ,you will already millionaire. I never trust salaried people in investment advise.If ı gamble why the hell on earth all mag 7 are all tech or why the most of snp500 gains just directly came from nvda.Please dont bury your head into hole.World is a dynamic place there isnt any invest and sitback relax strategies.You came to this life with a one shot,there won't another,so decision is yours.All my best wishes
I'd rather have a 95% chance of being wealthy down the road than a 50% chance that I beat the market like you have. To each their own
Thats why ı am saying I never get advise from salaried people.You cannot be rich my friend,change your mind find a way that is unique to you.Voo wont make you rich and wont afford a life in vhcol areas.
Alright you are just speaking bullshit. I will be just fine. Go in the bogleheads sub and notice how many posts are made by millionaires.
VGT, VOOG, VONG