China

[TBV]

What possible technology can they have that's so secret that they have to bury damaged pieces of a train rather than take them apart to see what caused the accident in the first place?  Or to learn how to prevent similar accidents in the future?

Super secret technology that's so important, they realized they needed to dig the train out again!

http://mdn.mainichi.jp/mdnnews/news/201 ... 1000c.html

Maybe they forgot their keys to the other trains?

In the old Soviet Union, air crashes were considered a secret.  So, if your relative died in a plane crash, they just disappeared.  End of story.

[smurff]

The story I always heard was that a long time ago the aliens came down and had relations with the monkeys and human beings were the resulting species.

The reason they keep coming back is to check on their creation, and we are also fascinated by these creatures with whom we feel a strange bond.

That's why we don't have that much body hair (aliens are smooth, right?) and we have a persistent longing for a thing we cannot name.

MediumTex, that's the story I've heard, except it wasn't a monkey, it was the "Missing Link" (great ape closer to a chimp or orangutan than to a gorilla, and more intelligent than either).  I called them humanoids, but there's probably a better term for them.  Anyway, Neanderthals and Cro-Magnons were just a couple of the aliens' intermediary progeny between that Missing Link and us humans.

BTW, it was the aliens who taught us how precious gold and silver were. 
According to the show, they are raw materials they needed and that was one of the reasons they came to Earth.

Too bad the aliens don't hang around long when they visit.

Smurff:
What possible technology can they have that's so secret that they have to bury damaged pieces of a train rather than take them apart to see what caused the accident in the first place?  Or to learn how to prevent similar accidents in the future?

Gumby:
Super secret technology that's so important, they realized they needed to dig the train out again!

http://mdn.mainichi.jp/mdnnews/news/201 ... 1000c.html

Maybe they forgot their keys to the other trains?

Or somebody forgot that little bag of candy in the train engineer's compartment?

[doodle]

Pretty good arguments on why the American dream hasn't been exported to China and India: http://www.thedaily.com/page/2011/02/24 ... almia-1-2/

[ahhrunforthehills]

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[ahhrunforthehills]

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[AdamA]

But China seems very capable to take the reigns for the next century.  They make up a large component of my stock allocation.  You can definitely tell the ball is rolling there.

It's funny, I left America thinking that it was the worst place for investing.  Hell, Peter Schiff was my broker.  But after all that traveling, I realized that in America it is SO EASY to start a business and make money just because of the existing infrastructure.  The mail system, the internet, the highways, the police... everything is very easy here.  It simply is not the case in most other places.  Try to get DHL or the internet in the middle of Australia or South Africa at a reasonable cost... good luck with that.  We just need to ditch that champagne taste on a beer budget and we'll be okay

Interesting post.  The two paragraphs seem a little bit in conflict with one another, though.
Why invest so much in China if the US it's "so easy" in the US?

Is Peter Schiff still your broker?

[MediumTex]

But China seems very capable to take the reigns for the next century.  They make up a large component of my stock allocation.  You can definitely tell the ball is rolling there.

It's funny, I left America thinking that it was the worst place for investing.  Hell, Peter Schiff was my broker.  But after all that traveling, I realized that in America it is SO EASY to start a business and make money just because of the existing infrastructure.  The mail system, the internet, the highways, the police... everything is very easy here.  It simply is not the case in most other places.  Try to get DHL or the internet in the middle of Australia or South Africa at a reasonable cost... good luck with that.  We just need to ditch that champagne taste on a beer budget and we'll be okay

Interesting post.  The two paragraphs seem a little bit in conflict with one another, though.
Why invest so much in China if the US it's "so easy" in the US?

Is Peter Schiff still your broker?

China is going to take the reigns for the next century...when the average Chinese person isn't even aware that there has been a property bubble anywhere in the world, EVER?

Their goal is to have a lifestyle like "Desperate Houswives"?

I would think that after being lied to for so long by their own government, they might suspect that propaganda from other countries might also be a bit disconnected from the truth as well.

China sounds to me like one of those wandering dreamers from an old Kris Kristofferson or Glen Campbell song.

It will be fascinating to watch as these mis-perceptions begin to create friction as they rub against reality. 

[ahhrunforthehills]

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[MediumTex]

I think that what makes or breaks a country is abundant natural resources, strong borders, hard work, a high savings rate, a modest standard of living, and the lack of a dictator who values his horse more than his people. 

IMHO I saw many of those things in modern-day China.

Here is how I am scoring it:

China's natural resource deposits are not all that impressive relative to its population size. 

I don't know if China has strong borders or not.  Other than a few North Koreans, is anyone desperate to get INTO China?

I am sure the Chinese people are hard workers, live modestly and have a high savings rate.

I would say that China DOES have a dictatorial government.

So China has three out of six of your criteria for making or breaking a country.

The one thing that would really start to impress me about China would be if there was some real political reform.  Until that happens, I'm going to be skeptical.

[ahhrunforthehills]

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[Liz L.]

ahhrunforthehills, I will ask my favorite question, the answer to which is always far more interesting to me than anyone's opinions about what is wrong with this country. (I assure you, I think there's plenty wrong with it, but my husband's job means we have to live near NYC; and even if there were a way out, China is one of the very last places I want to be.)

My question is:

Exactly what are you doing with your money right now, and why?

(I never ask questions I'm not willing to answer. Most of our money is in retirement funds, which are 100% in the PP as of a couple of months ago. I have a variable portfolio of 7% of the value of the 401K, etc., and in that, I'm in a favorite three-out-of-four elements of the PP allocation, i.e., no stock, unless you count the miners.)

[AdamA]

I know I will get flamed for this.... but my stock allocation is broken down as:

40% Vanguard Pacific Stock Index Fund Admiral Shares (VPADX)
15.00% Vanguard Emerging Markets Ind Fund Admiral  (VEMAX)
10.00% Vanguard European Ind Fund Admiral  (VEUSX)
35.00% Vanguard Total Stock Market Index Fund Admiral (VTSAX)

I am officially flaming you.

[Liz L.]

ahhrun, thanks so much for the timely, detailed response!

[ahhrunforthehills]

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[MediumTex]

I know I will get flamed for this....

Now before everyone starts bashing me... I do not claim that it is the best allocation.  But for some strange reason I sleep well at night with it... so back off 

Don't assume you will be flamed or bashed for anything here.

You may find disagreement with the ability of your strategy to achieve the goals you define for the strategy, but it's all pretty civil.

In any case, if you're running something besides the PP, there would be no point in criticizing it because it's NOT a PP.  That would be like criticizing a camel because it's not a zebra.

I think the trouble starts when someone says that they want the safety and stability of the PP, but they have tweaked everything about the basic strategy.  Those stories tend not to end well, with the investor frequently getting more risk AND less return for their tweaking trouble.

[6 Iron]

If Paul Boyer is still around, I would be interested in hearing his thoughts on this, as he elected 1 to 2 years ago to run a modified PP with his equity exposure at 50% small cap value, and 50% emerging markets. I personally think that you will likely be ok, assuming the heightened volatility does not lead you astray at the worst possible time, particularly with the confounding variable of currency exchange rates.

[ahhrunforthehills]

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[ahhrunforthehills]

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[Storm]

I know I will get flamed for this.... but my stock allocation is broken down as:

40% Vanguard Pacific Stock Index Fund Admiral Shares (VPADX)
15.00% Vanguard Emerging Markets Ind Fund Admiral  (VEMAX)
10.00% Vanguard European Ind Fund Admiral  (VEUSX)
35.00% Vanguard Total Stock Market Index Fund Admiral (VTSAX)

I don't mean to flame you in any way, but have you considered that a simple S&P 500 index fund has significant international exposure?  When I was traveling in China and Taiwan recently, large multinationals are everywhere and they are making a ton of cash.  McDonalds, Starbucks, KFC, Coca-Cola, Apple, and a million other brands are doing great business in over 20 countries worldwide.  In China most McDonalds restaurants are 3 stories tall and they are packed with lines out the doors all day long...  They are basically printing money.  Not only that, these companies are now expert at doing business internationally and know how to hedge Forex risk.  The biggest advantage is that they also adhere to US accounting standards, which might have caused Enron but are still the best in the world.

I think a standard S&P index fund gives you all the benefits of international exposure with none of the risks:

1.  Large multinationals with a proven track record of doing business in well over 20 global markets with great brand recognition and an even more prestigious reputation than they enjoy in their home country:  case in point, McDonalds, which is considered by most Chinese to be a symbol of middle class America and the west which they aspire to emulate.

2.  Accounting standards which are held to the highest SEC and US standards (don't laugh), at least we have regulations, and companies are penalized for cooking the books.

3.  Management teams that have decades of experience doing business in foreign countries and know how to hedge currency risk, work with local customs and government officials, and get business done.

I'm not really sure what an emerging market fund can give you other than a lot more downside risk.  The Asian companies in particular are not being held to globally accepted accounting standards and have a very troubling history of cooking their books.

[stone]

Storm, the observations about US stocks earning oversees are all very well in theory but are you as a stock owner likely to harvest any of those earnings?
In practice owning a US stock index has not done much for a buy and hold investor (or even one using 15%-35% PP bands) for the last dozen or so years.
http://topforeignstocks.com/2010/12/09/ ... g-markets/

Could there be a very big difference between companies getting earnings and you getting those earnings? Perhaps all of the earnings are taken either as employee stock options or share buy backs that give transient volatility that skilled traders can harvest but that slips us by? SP500 companies might be at the cutting edge of how to disperse earnings in a way that eludes retail investors?

[Gumby]

Fascinating report on China out by the San Francisco Fed out yesterday...

http://www.frbsf.org/publications/econo ... 11-25.html

Apparently, 88.5% of US consumer spending is spent on goods and services made in the US, while China gets only 2.7% of American consumer dollars. And even when you buy Chinese, 55¢ of every dollar goes to services produced in the U.S.

[align=center][/align]

Obviously, if a pair of sneakers made in China costs $70 in the United States, not all of that retail price goes to the Chinese manufacturer. In fact, the bulk of the retail price pays for transportation of the sneakers in the United States, rent for the store where they are sold, profits for shareholders of the U.S. retailer, and the cost of marketing the sneakers. These costs include the salaries, wages, and benefits paid to the U.S. workers and managers who staff these operations.

Source: http://www.frbsf.org/publications/econo ... 11-25.html

[ahhrunforthehills]

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[ahhrunforthehills]

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[Storm]

I think if companies like McDonalds experience a decrease in sales in the US but an increase in international sales, their shareholders will be just fine.  After all, I don't expect many retiring baby boomers to live on Big Macs and Coca-Cola, unless they don't want to live very long, of course.  But these companies in the S&P 500 have shown an ability to achieve emerging market growth year after year and don't seem to be slowing down now.

In a way I'm kicking myself for not participating in some of the trends in my VP that have been doing really good in the US.  For example, Whole Foods has done phenomenally.  Chipotle in the US has also done awesome, proving that US consumers are now ready for fast food with a higher quality of ingredients.  Emerging markets are a few years behind us.  As those consumers get beyond the novelty of McDonalds and perhaps start looking for healthier alternatives I can see newer US companies like these begin to perform well in emerging markets.

I guess I just don't see any downside to having 100% of your equity exposure in S&P 500.  You still get a great emerging market exposure while limiting the risk of outright fraud and accounting malpractice that companies native to the emerging markets might bring.

[stone]

Storm, doesn't the Japanese stock market just like the US stock market consist of excellent multinational companies that have earnings in growing economies outside Japan? It doesn't seem to have saved the day there. Although US companies may be managed with perfect accounting standards, do fraudulent companies actually cost a diversified emerging market stock fund very much? How does that compare to the level of stock dilution by employee stock options from US companies? It would be fascinating to see a comparison of company earnings over the past 12 years versus total returns for a buy and hold investor over a variety of different international markets. My guess is that the US companies and Japanese companies would do much worse than the earnings would suggest they ought to.