"Investing Without Borders: A Hitchhiker's Guide to ..."

[chang]

I wrote this article for M* back in 2009 ... I can hardly believe that was 13 years ago. M* lost it a few years ago, and Darrin Thomas tried but was unable to find it anywhere. I recently found a draft copy in my files, which is attached below. I think the final version brushed up some of the charts and graphs a little bit, but otherwise there were no changes. Obviously the article is out of date, but I'm posting it here in case anyone's interested.

INVESTING WITHOUT BORDERS.pdf (454.03 KB)

[win1177]

Mar 12, 2022 11:14:27 GMT chang said:

I wrote this article for M* back in 2009 ... I can hardly believe that was 13 years ago. M* lost it a few years ago, and Darrin Thomas tried but was unable to find it anywhere. I recently found a draft copy in my files, which is attached below. I think the final version brushed up some of the charts and graphs a little bit, but otherwise there were no changes. Obviously the article is out of date, but I'm posting it here in case anyone's interested.

<button disabled="" class="c-attachment-insert--linked o-btn--sm">Attachment Deleted</button>

Thanks Chang! Interesting read. I’m still trying to figure out how much to hold in foreign stocks, as well as emerging markets. Don’t even get me started on bonds, US vs. International vs. EM.

Basically decided on somewhere around 15-20% foreign, with another 4-5% in EM equities. Also about 20% opinion foreign bonds (including EM). I am still below that amount, about 10% in equity and 5% in foreign bonds, but looking to add to both areas if/ when the slow gradual selloff comes closer to an end. Recently US equities have consistently outperformed foreign, but (sooner or later) I suspect that will reverse. Again, thanks!

Win

[Deleted]

Thanks Chang. I am at about 20% foreign - mostly developed - it took a lot to get me there. I did so based on expected forward returns in the US. Downloaded your article which looks like you put a lot of time and thought into.  

[johntaylor]

A topic which has interested me since having a chance as a kid to see frontier places in Asia/Africa. Would be great to see this with fresh numbers.

[alvinthechipmunk]

Interesting read. Thank you.

[steadyeddy]

chang, did not know you are such a wonderful writer !!! Kudos !!

Have you written anything lately?

[chang]

Mar 12, 2022 22:03:02 GMT steadyeddy said:

chang, did not know you are such a wonderful writer !!! Kudos !!

Have you written anything lately?

As a matter of fact, I’ve published three papers in the last year; two in physics journals and one in a mathematics journal. I don’t think these articles would attract much interest here, though.

[steadyeddy]

Mar 13, 2022 18:25:46 GMT chang said:

Mar 12, 2022 22:03:02 GMT steadyeddy said:

chang , did not know you are such a wonderful writer !!! Kudos !!

Have you written anything lately?

As a matter of fact, I’ve published three papers in the last year; two in physics journals and one in a mathematics journal. I don’t think these articles would attract much interest here, though.

chang, wow! Fantastic!!

[Chahta]

Good job. Takes some "chutzpah" to publish on a national website.

[steadyeddy]

Mar 13, 2022 18:25:46 GMT chang said:

Mar 12, 2022 22:03:02 GMT steadyeddy said:

chang , did not know you are such a wonderful writer !!! Kudos !!

Have you written anything lately?

As a matter of fact, I’ve published three papers in the last year; two in physics journals and one in a mathematics journal. I don’t think these articles would attract much interest here, though.

chang, if you have links to your papers it may be worthwhile sharing here. Who knows how many Math/Physics literates are on this forum - including myself. 😜

[johntaylor]

"The addition of 25-50% foreign equity to a U.S. portfolio would have increased returns and reduced risk during the last four decades"

YTD, the TSP I Fund is down less than C Fund

[FD1000]

Mar 12, 2022 11:14:27 GMT chang said:

I wrote this article for M* back in 2009 ... I can hardly believe that was 13 years ago. M* lost it a few years ago, and Darrin Thomas tried but was unable to find it anywhere. I recently found a draft copy in my files, which is attached below. I think the final version brushed up some of the charts and graphs a little bit, but otherwise there were no changes. Obviously the article is out of date, but I'm posting it here in case anyone's interested.

View Attachment

Excellent writing and analysis...but, that was 2009.

Let's check what happened since then:
1)  Quote: We see plainly that the addition of foreign exposure to a pure U.S. Draft 9/30/2009 portfolio increased returns and decreased volatility up to a point corresponding to approximately 40% foreign equity.
FD: Since 2009 this (link) proves that internation stocks had lower performance with higher volatility.  Using the SP500 was a better choice, QQQ was even better. Maybe it will reverse, but if I had to invest in stocks, I would still go for mainly US stocks until the world problems stabilize.  Don't forget that 40% of the SP500 revenues come from international.

2) Quote: You can clearly see that foreign small cap returns are not closely correlated with foreign large caps or with U.S. stocks.
FD: since 2009, they are highly correlated at 86-88, see PV(link).

3) Quote: This dropped to under one-half in 2008, and is expected to be about one-third by the year 2030
FD: US stocks as a % of the world jumped to almost 60% (link). Ruthless capitalism and American ingenuity still work.

==============

BTW, my longest holding fund was SGIIX(global fund), close to 10 years (2010-20) with legendary, Jean-Marie Eveillard, when he left, I left shortly after.