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Post by Deleted on Jan 29, 2022 2:20:23 GMT
I was just reading capital group insights from Rob Lovelace.
As per it,
The gains in US in last 10 years came 50% from Earning increase and 50% from P/E expansion.
Europe saw no Earning expansion.
Japan has been having earning expansion but no P/E expansion.
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Post by Deleted on Jan 29, 2022 11:24:04 GMT
My take is that with a currently highly priced market and lower rates for the foreseeable future, US growth will be mediocre. Not my analysis, but what I have read of others' work/research on this makes sense. As you note - much of the gains - 50% - have come from p/e expansion. I have been increasing my international allocation and am doing so annually through my 401K and blocks of cash periodically. Yesterday I added VNQI to my IRA and moved part of my thrift savings plan G fund (souped up money market) to the I fund (MSCI EAFE fund). I am up to 19% of entire portfolio in international and hope to get to at least 25% in the next year or two. Maybe more if this hypothesis gains more support. I am emphasizing developed over emerging.
By the way - I was surprised 50% of increase in price came from multiple expansion. That is something to take notice of as far as future returns and partly explains the lackluster outlook by so many investing houses.
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Post by bb2 on Jan 29, 2022 17:53:15 GMT
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Post by bb2 on Jan 29, 2022 18:21:44 GMT
I think I found what waffle was referring to. www.capitalgroup.com/institutional/insights/articles/rob-lovelace-year-ahead.html"Other markets have been growing at only about half the pace of the U.S. Europe had almost no earnings growth at all. Japan hasn't had any valuation expansion, but it’s had decent earnings growth. So those two markets have been compounding around 8% a year. Emerging markets are even lower — and a big piece of that is China, which is important to break out separately. Until recently, Chinese markets were growing at a similar pace to the U.S., but because of recent government announcements around common prosperity and state intervention in various industries, the valuation metric has been cut roughly in half. In addition, earnings growth in China has been relatively modest. There are some fast-growing companies, but there are also lots of others in the property and banking sector that have lost money, and therefore net earnings growth has been essentially flat. So when we look at growth around the world, most of it is finding its way to the bottom line in the U.S., which is why this market has outpaced others over the past decade. While we are seeing some excesses, what's happening in the U.S. is unique and keeps us focused on opportunities in this market. At the same time, the lack of valuation expansion across Japanese companies warrants further analysis. And while European and Chinese markets have been driven purely by valuation expansion, underneath the headline benchmarks we are finding many interesting companies at reasonable valuations. As mentioned before, it pays to focus on companies rather than markets and to look for opportunity regardless of a company’s domicile."
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Post by Deleted on Jan 29, 2022 18:28:43 GMT
Thanks bb2 for the Yardeni research. There are a few European stocks I keep my eye on, but I am going to stick with indexes and mutual funds for that part of my portfolio. I am already stretched to keep up with what I have.
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Post by bb2 on Jan 29, 2022 19:02:08 GMT
Yea, I've only owned DODFX, mainly because a buddy is a partner at D&C. It's been a dog. Europe is chemicals and crappy banks. The joke during the MTG bubble was that nobody would buy the mortgage loans anymore except UBS. Maybe it was Deutche; can't quite remember. I'll take FAANG any day.
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Post by Deleted on Jan 29, 2022 19:19:51 GMT
I hear you. Here are my "mistakes" from across the pond - HSBC (crappy bank), GSK (forget what happened, but it was something bad, right after I bought it at an all time high), and BTI (was actually able to get out of that one okay - again I forget how - exed from my brain). Billiton - forget where that one is based (Australia?) but something went really wrong in some poverty stricken country. It was bad. I was actually thinking of starting a walk of shame thread for investments like these just to remind us that we all are human.
But having said that - I'm a firm believer the US valuations are stretched. There are the exceptions and I will stay mostly US, but I've slowly been putting more there for the last year.
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Post by anitya on Jan 29, 2022 20:27:24 GMT
I was just reading capital group insights from Rob Lovelace. As per it, The gains in US in last 10 years came 50% from Earning increase and 50% from P/E expansion. Europe saw no Earning expansion. Japan has been having earning expansion but no P/E expansion. If you still have the page open on your computer, perhaps you would not mind adding / replying a link to it.
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Post by bb2 on Jan 29, 2022 20:40:49 GMT
anitya - read down the thread to my reply Rob puts that data into perspective, saying the US is still his fav. Here's the link...... www.capitalgroup.com/institutional/insights/articles/rob-lovelace-year-ahead.htmlsara - yea, I've made a couple mistakes on single stocks in Europe too. Kingfisher, a DIY retailer was a dud. I think the DIY landscape there is much more competative than in the US. I'm a DIY'er, and I'd been to an incredible store over there. M* liked it too. Vodafone was another that went nowhere. Didn't have losses but they did nothing. EU is great for a visit. I've got a hotel right across for the Pantheon for ya.
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Post by bb2 on Jan 29, 2022 22:18:20 GMT
I should add that US public policy has been very biz friendly for the last few decades. Tax laws and such. In cahoots with other countries. Ireland and such.
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Post by FD1000 on Jan 31, 2022 14:20:18 GMT
anitya - read down the thread to my reply Rob puts that data into perspective, saying the US is still his fav. Here's the link...... www.capitalgroup.com/institutional/insights/articles/rob-lovelace-year-ahead.htmlsara - yea, I've made a couple mistakes on single stocks in Europe too. Kingfisher, a DIY retailer was a dud. I think the DIY landscape there is much more competative than in the US. I'm a DIY'er, and I'd been to an incredible store over there. M* liked it too. Vodafone was another that went nowhere. Didn't have losses but they did nothing. EU is great for a visit. I've got a hotel right across for the Pantheon for ya. Why US LC stocks did better than most? It could be several things: the top companies are global giants known to many investors with lots of earnings, the Fed, the US gov trillions of spending. Wall ST is the best marketer. Lastly, there are more buyers than sellers. Of course, returns can't continue to be 16% annually in the next 10 years. If you asked me 3 years ago, I would say the same, and the SP500 made 100% anyway. ===================== This is what Rob Lovelace said a year ago on 1/29/2021( link). Q: During the market downturn in 2020, you said we were going through a valley but we could see the other side. Where are we in that journey? The markets may be a slightly different story since they’ve already anticipated the benefits of the vaccine and the recovery. So this is a time to be really selective in terms of individual companies. I expect some volatility, maybe substantial volatility. And there will be some disappointments for sure. But you’ll want to stay invested because, as we are seeing in China right now, we are expecting a period of real sustained economic growth, building on the rewiring of the economy that we’ve seen with the rapid growth of digitally focused companies. FD: Reality check. 2021 did not have substantial volatility, no dissapointments and the "stupid" SP500 made 28.7%. So what will be in 2022? The stock market will fluctuate, Risk will be elevated (anybody can see what happened in 01/2022 already ) The stock market will be up (based on my "secret" analysis of 80% positive years in the last 40 years). Be selective...mmm...that's a good one. I don't think I heard/read a fund manager saying "you don't need to be selective" Rates will go up, the Fed told us so. Manager funds don't make mistakes. This reminds me when I was in the military and many mornings the top officer gave us a ride to the base. One morning we came late because of the traffic. As we arrived to the base this guy told us "you are all late and will be punished but not me, I was just delayed" live and learn.
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Post by Deleted on Feb 1, 2022 11:20:17 GMT
anitya - read down the thread to my reply Rob puts that data into perspective, saying the US is still his fav. Here's the link...... www.capitalgroup.com/institutional/insights/articles/rob-lovelace-year-ahead.htmlsara - yea, I've made a couple mistakes on single stocks in Europe too. Kingfisher, a DIY retailer was a dud. I think the DIY landscape there is much more competative than in the US. I'm a DIY'er, and I'd been to an incredible store over there. M* liked it too. Vodafone was another that went nowhere. Didn't have losses but they did nothing. EU is great for a visit. I've got a hotel right across for the Pantheon for ya. I pretty much have the same outlook as Lovelace. I bumped up my developed international allocation by 1.5% last week. Now at 23% of equities. Won't go above 25%. Not picking companies though - just too much to deal with - have a mixture of mutual funds and etfs. Have my eye on a few companies and already hold a few, but that's it. Side note - I also have come around that TSLA also might have a place with the likes of AMZN and deserve its high multiple - haven't really looked too hard at it though.
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Post by anovice on Feb 2, 2022 1:38:34 GMT
Thanks bb2 for the Yardeni research. There are a few European stocks I keep my eye on, but I am going to stick with indexes and mutual funds for that part of my portfolio. I am already stretched to keep up with what I have. Sara, which international funds interest you?
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Post by Deleted on Feb 2, 2022 2:16:13 GMT
Thanks bb2 for the Yardeni research. There are a few European stocks I keep my eye on, but I am going to stick with indexes and mutual funds for that part of my portfolio. I am already stretched to keep up with what I have. Sara, which international funds interest you? Everything is an etf or individual stock except FIGRX and FEMKX. Etfs - VSS, VEA, IXUS, IEMG and an EFA equivalent. EWJ as a sector - Japan. I am experimenting. I got a heck of a bad surprise with capital gains with the mutual funds.
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