Gyroscopic Investing

For US investors who are using the PP, is it better to own a broad index fund of US stocks or world stocks?

StinkyToes wrote: ↑Wed Apr 22, 2020 7:48 am For US investors who are using the PP, is it better to own a broad index fund of US stocks or world stocks?

Definitely world stocks. In my opinion, a healthy dose of factor-tilting is advisable as well.

This is the one area I think that Craig and Tex got it wrong, in particular because the equity slice of the PP is so small.

Smith1776 wrote: ↑Wed Apr 22, 2020 8:54 am Definitely world stocks.

I do not get it, what's the relation of world stocks and US treasuries ? I can imagine that many countries "invest" in treasuries, but still that does not necessarily bring direct relation. For me (and not that my opinion weights too much) - PP was designed to work extremely well in the US context. On the other hand, relation between assets in the US context is ... well you know better than me From personal experience I can tell you that neither Gold, nor treasuries care what's going on here in Europe or elsewhere in the world. Guess a piece of all that comes due to the special role of USD. World-stocks + world bonds works equally bad - OK, it depends on the allocation, but normally (50/50, 60/40) its quite a Bogglehead type of jaw dropping falls in bad times.

I don't understand how international stocks fit into the theme of the PP. The PP is designed to reflect the possible economic states at any given time. And that can vary from county to country. If you are using US LT Treasuries for deflation and US ST Treasuries for recession, why would you not use US stocks to counterbalance those? it seems to me that adding in stocks from Japan or Finland would make your stock component not necessarily balance out with the bond portion of the PP. That is not even adding in the currency issues.

I'm not the least tempted to add international stocks. There seem to be only disadvantages. Big US companies have plenty going on overseas as it is, too much even.

StinkyToes wrote: ↑Wed Apr 22, 2020 7:48 am For US investors who are using the PP, is it better to own a broad index fund of US stocks or world stocks?

Harry suggested domestic, I believe, so for an American that would be pure U.S. stocks with any international in the VP.
If I remember right, there were callers who asked him on his radio show, “what if I’m in a country with a corrupt gov’t or a shitty stock market”, something to that effect. I guess then it becomes a more difficult choice.

dualstow wrote: ↑Wed Apr 22, 2020 11:02 am If I remember right, there were callers who asked him on his radio show, “what if I’m in a country with a corrupt gov’t or a shitty stock market”, something to that effect. I guess then it becomes a more difficult choice.

Well, the choice is clear for me - if its PP, then its US PP. With the broad availability of ETFs one can invest in almost anything that has US context, even though those US-focused ETFs have non-US domicile (e.g. Luxembourg, Ireland normally for UCITS-regulated ETFs in Europe)

^^^ I think the concept was to invest in the country where you’re earning a living and paying your bills. If you’re in Bulgaria...I suppose Bulgarian pp’ers would invest in a European index. But, the U.S.’s share is such a massive slice of the world, we have a military that can enforce embargoes and frankly, bully other countries into going along with us. I can’t imagine not investing in the U.S. market.

And yet, I barely invest in rising China in my vp.

I'm in the USA, and in my PP I only have US stocks. I own international stocks in my VP.

dualstow wrote: ↑Wed Apr 22, 2020 12:19 pm ^^^ I think the concept was to invest in the country where you’re earning a living and paying your bills.

That makes sense, but still if one is afraid of currency fluctuations he/she can utilize currency hedged PP instruments that still focus on US. Sorry, if it appears redundant, but what I am just pointing is that relation of the 4 PP assets is not that evident outside US .. for example EU stocks-Gold, EU stocks-EU bonds, etc. And also, as far as I can recall, quite some of the world's developed countries are already issuing bonds with negative rates (which is still not the case in US), and that's also slightly distorting the bond concept... On top of all that, the ability to print the PP-underlying currency as much as you want (24/7) is incredible benefit as well

That makes perfect sense, too. Hey, as far as I’m concerned, buy all the U.S. stocks you want. I’ll sell you some. Treasuries, too.

My salary is dependent on US economy so I tilt my savings away from it

Not realy on topic.

I am a german PP Investor. My quarter of Stocks is the Global Titan 50.
There is enough Power within these 50 Group of companies.
Nearly 80% in U.S. and all the FAANG, but this N in FAANG is Nestlé

Harry.Browne wrote: ↑Fri Apr 24, 2020 5:32 am Not realy on topic.

I am a german PP Investor. My quarter of Stocks is the Global Titan 50.
There is enough Power within these 50 Group of companies.
Nearly 80% in U.S. and all the FAANG, but this N in FAANG is Nestlé

With my German friend, N can only mean one thing: Nutella. I guess his F would be Ferrero if he could buy stock in it.

Ferrero S. p. A. is not listet on a Stock Exchange (if only they were). Itˋs an italien Family Business.
But nutella is a Good guess

Harry.Browne wrote: ↑Sat Apr 25, 2020 1:07 am Ferrero S. p. A. is not listet on a Stock Exchange (if only they were). Itˋs an italien Family Business.
But nutella is a Good guess

It wasn’t a guess. You mentioned Nestlé as your N. I’m just saying my German buddy, like a lot of Germans, loves Nutella.
I actually got into an argument with a classmate in university, another American, who spent time in Germany and was telling me about “this cool German spread called Nutella.” I told her it was Italian, and she wouldn’t believe me. Early 90s. It took her a trip to the library to find out she was wrong.

Nutella, for me, is the worst Sort of bread topping.

I remember my Time at the German Naval Forces (Bundesmarine). Every Morning you could choose between Nutella or strawberry Jam. Ist was the Horror. My Time there was the early 80th.

I love them both.
— Strawberry jam is domestic (U.S.) stock. Love it, have to have it. Can’t live without it. (I have some from the farmers market in my fridge right now, but for some reason it’s liquidy this time).

— Nutella is international stock. There’s a strong allure, but not only is it not necessary, one may regret ever having discovered it. (I’ll spare you the details).

I think palm oil is the main ingredient in all the frostings I've seen.

"It's bad because it's so goddamn delicious."
- Stephan J. Guyenet

I'm sorry for helping to lead this thread astray. I think the OP got his answer.
Worst thing about palm oil is that they burn down the habitat of orangutans to put in more plantations.

dualstow wrote: ↑Sat Apr 25, 2020 11:09 am they burn down the habitat of orangutans

Bad thing, according to some sources we need those buddies to do the proper US stock picking Or are chimpanzees used for that purpose.. cant recall anymore..

Indeed, the chimps were the traders. Here what one of them (Raven) did :

https://www.guinnessworldrecords.com/wo ... all-street

International is for the VP. (That said, I do think having some exposure to non-US is a good idea. Just not in the PP.)

To put the question backwards: should a non-US PP investor invest in US stocks and if so, what percentage? As a Euro investor, I am inclined to 50% EU, 30% US, 20% EM (not far off World allocation), but I have no evidence for this.

My impression, from portfoliocharts.com and my own experience, is that the performance of a non-US PP in local currency is not very different from that of a US PP in dollars. So maybe there is no advantage to including stocks from outside the investor's home market.

I would suggest that the smaller your countries economy, the more international shares you should own. From memory, around half of Australia stock market capitalisation comes from four banks. More diversification than that certainly helps me sleep at night.

The attached link indicates around 2/3 of the MSCI World consists of US companies.
Also, have a look what happens in non-steady state conditions. Money was hardly rushing into Australian 10 year bonds as a safe haven last month.

https://www.msci.com/documents/10199/49 ... 93b1f3d60b

https://markets.ft.com/data/etfs/tearsh ... GB:ASX:AUD