“If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the will which says to them: 'Hold on!'
If you can talk with crowds and keep your virtue,
Or walk with Kings - nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!”
― If: A Father's Advice to His Son
If diversification is your main goal in retirement fund investing, then just put all your equity holdings in a whole world mutual fund, done. Still not buying the NEED for investing in foreign markets. You can slice and dice the history of returns all you want, but what foreign markets did before about 1981 can not be used because you could not invest in them prior to 1981, unless you bought individual company stocks. Hopefully nobody is doing that now 😣. Over the past 40 years the US has far out performed developed foreign markets. (Have I every said that before 😘).
@jkandell makes some good points. It's only been 3 months of the new administration. If there is anything consistent about US companies is that money matters most. If the new administration is viewed as negatively impacting company profits, they will react.
Well, the chaos didn't last long. Tariffs with China are in the process of resolving. UK close to a deal. The S&P 500 is now only down about 1% year to date and up 11.2% for the trailing 12 months. Things could get worse short term but moving in the right direction now. Just saying 😋.
@pizzaman Well, among many, many examples of "announcements" of concepts of a plan carefully couched as done deals so spike market enthusiasm, I'm old enough to remember the 2020 Phase One Trade Deal with China. Big splashy Trump announcement, holding up signed folders, stock market jacked up on the "news", the usual dog and pony. "$200 billion trade deal!" they shouted. Except, none of it ever happened, nor did the "massive" Foxconn plant that was announced, and so many other examples.
It's always been smoke and mirrors with this guy, his whole life. "The show." The UK thing last week was a sham, gussied up like a trade deal, but the actual paperwork said it was an agreement to talk about maybe someday a future deal. UK is 3% of our trade, so even if something happens, it's nothing. Like the money we'll make on the tariffs on penguins. The trade deals the rest of the world are making with each other for weapons, soy beans, other things they traditionally bought from us are real and long-lasting deals, and will affect our economy and GDP for years to come.
This is the chaos, up and down markets, likely "look over here" diversions to distract from the empty ports, the coming, admitted spike in inflation and cost of living, layoffs, small businesses closing, 1960s-70s stagflation, and we'll see how the market likes that. The street investors, money movers, are hanging in there right now for the tax breaks, but that will change. Low taxes on no profits aren't as much fun as low taxes in a thriving, profitable economy.
We are living through a great case study in long term retirement planning/investing! What do you do when everybody is screaming the sky is falling? 😱 Nothing 😶. The US has gone through WWI, the Great Depression, WWII, Korean War, stagflation, 1987 black Monday, internet bubble, the great recession, world wide pandemic, two terms of Trump. And yet we are still the world's dominate financial power, representing about 65% of total world wealth. That's not going to change anytime soon.
Warren Buffett is older then all of us, seen more then any of us. He invests almost exclusively in US companies. He has done very well for a very long time.
Buffett: Never bet against America
https://buffett.cnbc.com/2018/07/02/buffett-on-america.html
@pizzaman I trust you noted one of the Buffet clips you posted was about how a major America's advantage was our huge number of ... immigrants. (Sorry, couldn't resist.) My problems with your argument are that (1) it just so happens by the luck of the gods that you happen to be born in the very market and time that just so happens to have the best returns inherently compared to the rest of the earth? Why do people in other countries also happen to tend to advocate for the superiority of their own country's markets? Or, as many think, is it a cognitive bias to over-favor one's own country? (2) The relation between a country's economy and its stock returns is not necessarily clearly correlated. Equity returns are related to profitability and risk in relation to price. A great economy (or company at the stock level) that's overpriced won't have good returns; a mediocre company that is priced cheap will have high returns; a country without profitable businesses will not have good returns regardless. If you look at expected returns in either a valuation model or a dividend growth model you'll see US expected returns are lower than most of the world right now, even before the current administration. (3) authoritarian regimes tend to have to lower stock returns, in part because of the cronyism; but sometimes fascist regimes have higher returns at first. we don't know how it will play out here.
Buffett invests in the US because it is his expertise. I agree with Jonathan and Bill. Simple investors targeting retirement (like me) should diversify their investment (I am 50/50 - US/International) and avoid timing (or opportunities according to PizzaMan).
@jkandell You are 100% correct that I was able to retire at a relatively young age because of the great US stock returns of the past 15 years, no question. Please note that during that 15 year span experts were complaining that the US market was way over priced and we should invest more in foreign markets. Foreign markets did well but the US did a LOT better. The main reason that I went to 90% equities, all in US stocks, in about 2012 was that the US stock market was undoubtedly going to go up after the great recession. Didn't know at the time the comeback would keep going until just this past February with another all time high.
My two main criteria for retirement investing is return on investment, long term, and risk. I hope I will have at least 30 more years on this planet so I look at long term returns. Looking at the past 30-40 years the US stock market has done way better then anyplace else. That's the numbers. I have a fairly high risk tolerance for my investing, partly due to us having more money then we really need at our present standard of living, so we can withstand a prolonged downturn. I understand that a lot of people don't have that buffer. We have a 7 year long US Treasury bond ladder so sequence of return risk is not a risk for us.
This works for us. Everybody's situation is different. My takeaway is that no matter what your investment style is or what asset allocation you use, just stick with it and stop watching the news 😉.
You are lucky. 90% equity is a risk. ‘Stop watching the news and stick closely to your plan’ is a good suggestion, nevertheless this topic is mainly about the news.
The US has gone through WWI, the Great Depression, WWII, Korean War, stagflation, 1987 black Monday, internet bubble, the great recession, world wide pandemic, two terms of Trump.
We've only made it through one term of Trump.
Well, hundreds of thousands of Americans didn't make it, technically. They're dead due to the lies and mismanagement about COVID. My family members and neighbors among them. They believed it was "just the flu, go about your life." He had some adults around him the first time. This time, he does not, so I'm not optimistic. The chaos so far speaks for itself. I always said "No, this time is not different, stay the course." Now I'm not so sure, again, the damage being done is inarguably going to be long-term.
Many Americans didn't make it through the events you cite, particularly working folks those with less. They were destroyed for life, bankrupted, many committed suicide or died from the quality of life those events brought to them after working their entire lives. I see more of that ahead. It's not good for anyone, other than those at the tippy top.
I have a fairly high risk tolerance for my investing, partly due to us having more money then we really need at our present standard of living, so we can withstand a prolonged downturn. I understand that a lot of people don't have that buffer. We have a 7 year long US Treasury bond ladder so sequence of return risk is not a risk for us.
Not needing your equity to maintain your standard of living does change things. The interesting thing is it is rational in that circumstance to conclude "I have my standard of living covered by treasury bonds, so I can afford to go 90% equities"; but it's also rational to conclude "I have my standard of living covered, there is no need to take unnecessary risk". Both attitudes are rational depending on one's subjective preferences.
@jkandell I should clarify, our bond ladder will pay for essential and expected expenses, not vacations, or new car if needed, etc. Could I convert all of our retirement funds to a one through 30 year US Treasury ladder? Sure. But then there would be little margin for error. What if my wife and I both end up in a nursing home for say, 6 years each 🤒. Boom, money in gone 😵. What if we want to give to charities to support the less fortunate? Can't do much of that ☹️. Investing in equities over a 30 year time frame, be it all in US markets, all in foreign markets, or some mix, is not risky 🙂. If it is then there is no point in using PRC because there would be nothing to model. Sorry, that was a little blunt, but hopefully conveys my logic 😘.
If it is then there is no point in using PRC because there would be nothing to model. Sorry, that was a little blunt, but hopefully conveys my logic 😘.
You're the first person I've heard say they needed to invest in more stocks cause they bought PRC and there would be nothing to model. 🙂 Just kidding, I get what you're saying, and agree.
How to Bake a Cake: An Asset Allocation Mashup | Rick Ferri & Paul Merriman | 134
https://www.youtube.com/watch?v=qXUwFBlmLJ4
In this YouTube, two respectable individuals discuss International, Bonds, Small Cap Value, and other Asset Allocation topics.
