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    Home Unlabelled Vanguard suggests "global market capitalization weight" as starting point for index investors Investing

    Vanguard suggests "global market capitalization weight" as starting point for index investors Investing

    February 27, 2019

    Vanguard suggests "global market capitalization weight" as starting point for index investors Investing

    Vanguard suggests "global market capitalization weight" as starting point for index investors

    Posted: 27 Feb 2019 12:06 AM PST

    Has anyone read Vanguard's February whitepaper on international investing? I noticed it seems to replace their 2012 study. Similar text, new data.

    Here is the PDF: Global equity investing: The benefits of diversification and sizing your allocation (Feb 2019)

    It's fairly short, but if you don't feel like reading it, here's what I gleaned:

    • The U.S. represents 55.1% of the equity market, versus 44.9% for international, as of Sept. 2018. Image.
    • U.S. stocks have the lowest volatility of any country, but a global market provides the lowest volatility. Image.
    • Vanguard's data suggests maximum volatility reduction was achieved with a 40-50% international allocation (but why not just invest in a global market cap weighted index?).
    • Emerging markets should be market weighted, too. They have delivered "higher average returns, albeit with higher volatility, than those of developed markets." However, individual EMs are uncorrelated, so the risk of investing in all of them is lower.
    • Currency exposure risks from international investing are minimal, and in some cases, reduce volatility.
    • U.S. investors don't benefit as much from international as investors in other countries. Vanguard's ten year, forward-looking model showed maximum volatility reduction in the U.S. at 4%, the UK at 9%, Canada at 11%, and Australia at 15% (roughly). Image.
    • Over-weighting U.S. or international stocks leads to sector overexposure and risk. U.S. companies skew towards technology, biotech, and software, while other countries have more "old world" industries such as electrical equipment and automobiles (Vanguard's 2012 study). A global portfolio more accurately captures the market weight of all these industries.

    Vanguard also responds to the question if U.S. multinationals provide enough international exposure:

    First, simply focusing on domestic companies means an investor has no stake in leading global companies that are domiciled outside their home market. Second, many firms seek to hedge away currency fluctuations of their foreign operations. Although this can help smooth revenue streams, foreign exchange can be a diversifier for an investor's portfolio. Finally, a portfolio made up solely of domestic firms is likely to have less-diversified sector exposures than the global equity market portfolio.

    The report summarizes the benefits of global investing:

    By including both broadly diversified U.S. and non-U.S. equities in a portfolio, the investor should obtain a return that falls between those of the U.S. market and those of the non-U.S. market. For example, in the mid-1980s and most of the 2000s, exposure to diversified non-U.S. equities would have allowed a U.S. investor to participate in the outperformance of those markets. On the other hand, exposure to U.S. equities for most of the 2010s would have benefited global investors domiciled outside the United States.

    My prediction: VTWAX will eventually replace VTSAX and VTIAX in all Vanguard target date funds.

    What do you think?

    submitted by /u/VegetableJunkie
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    Elon Musk lashes out: 'Something is broken with SEC oversight'

    Posted: 26 Feb 2019 04:36 AM PST

    Appears to be a continuation from yesterday's tweets which caused a 5% drop in TSLA.

    https://www.cnbc.com/2019/02/26/elon-musk-lashes-out-something-is-broken-with-sec-oversight.html

    submitted by /u/pipsdontsqueak
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    WW, formerly Weight Watchers, craters 28 percent after posting weak 4Q results and 2019 forecast

    Posted: 26 Feb 2019 01:42 PM PST

    WW reported adjusted fourth-quarter earnings of 46 cents per share, falling well short of the 60 cents per share analysts polled by Refinitiv had expected.

    Sales reached $330 million, also coming in below the $347 million Wall Street had expected.

    For 2019, WW said it expects to generate about $1.4 billion in revenue. Analysts had been predicting $1.66 billion in sales for the year.

    https://www.cnbc.com/2019/02/26/weight-watchers-international-q4-earnings-2018.html

    submitted by /u/pipsdontsqueak
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    Books worth reading on investing?

    Posted: 27 Feb 2019 03:56 AM PST

    Is there a recommended read list? I've read a few basic books on personal finance and budgeting etc etc. but I feel that I have a solid grasp on my finances, and now in my early 30s I'm getting to the point where I can afford to (and want to) branch out and invest money that is over and above what is invested in my employer sponsored programs.

    Does anyone have any recommendations? I've taken a finance class or two in my collegiate days, and work in business (sales/marketing/accounting background) so I think I have a tendency to grasp the topics when presented, but I just don't know where to start.

    Thank you all for your help.

    submitted by /u/mkwink07
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    Practical Books/Textbooks for Learning Finance?

    Posted: 26 Feb 2019 06:01 PM PST

    Hello, I am an undergraduate student studying economics who recently applied to several investment internships. I just received my first offer for an investment firm but I am concerned that I know next to nothing about finance. For example during one of my interviews I was asked if I had any experience in financial analysis/modeling and I had to explain that that I had no real experience outside of market analysis (economics).

    My question is what books/textbooks would be best for a novice like myself to develop a solid foundation in finance? Any websites, articles or video series which provide a comprehensive overview of investment banking, corporate finance, vc, private equity etc. would also be useful. I really want to understand the key differences between these fields and to develop an understanding of this industry despite not having a traditional finance background.

    Any recommendations would be greatly appreciated!

    submitted by /u/FreezerTheif
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    Private Company Disclosures to Shareholders?

    Posted: 26 Feb 2019 10:13 PM PST

    I left a start-up job several months ago and decided to exercise my ISO's for shares of the company before they expired.

    The company has since raised substantial money (post-Series B) but is still private.

    I know the fair market value of the shares at the time of exercise, but have no clue what any of the other cap table parameters might be.

    As a shareholder in a private company, what is the company legally required to disclose to me? Nothing? Something?

    submitted by /u/bones222222
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    Wall Street analysts see Musk's SEC battle weighing on Tesla shares, but CEO unlikely to be removed

    Posted: 26 Feb 2019 07:07 AM PST

    Corporate bonds question

    Posted: 26 Feb 2019 04:51 PM PST

    Do companies pay the principal of an issued bond or do they refinance it in some way? From my understanding companies issue say 5 billion $ in bonds, use the money for an investment (asset), get sufficient returns and pay their interest which is the line "Interest expense" in an income statement". What I find hard to grasp is how does a company repay the 5 billion $ in principal? How do they repay it if it all matures in a single quarter or year? Is there a line in the income statement that I don't know which shows how much principal a company pays in a quarter?

    submitted by /u/D4N7E
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    UK's richest man in £1bn oil and chemicals investment

    Posted: 26 Feb 2019 11:22 PM PST

    How do I start investing as a 15 year old?

    Posted: 26 Feb 2019 09:37 PM PST

    Hey guys, I am looking to invest the little money that I get from my day job, either short term or long term. What are the risks and benefits of both? And what are some ways I can start doing this?

    submitted by /u/Ligma_balls_lol
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    How is it Netflix's market cap is 158 billion and it only nets about a quarter billion?

    Posted: 26 Feb 2019 06:09 AM PST

    A p/e of 135 So basically if it was a company you bought as a whole it would take about 135 years to pay off...

    ​

    I don't get it. I understand somewhat if it was still growth and in market but is it?

    submitted by /u/opencoins
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    GE Holders: Surprise! You now own some WAB shares!

    Posted: 26 Feb 2019 06:08 AM PST

    This morning GA executed a corporate action that split off 0.005403 shares of WAB for every GE share you own.

    Here is the Option clearing corp statement about it for option traders

    If you're an option trader, pay attention! This means your options are now non-standard. Non-standard options typically lack liquidity. Some brokers only allow closing orders on them (as well as exercise). Today will be a good liquid day for these options as many will be looking to close.

    submitted by /u/doougle
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    Amazon, Comcast, Electronic Arts submit bids for Nexon holding firm-Maeil report

    Posted: 27 Feb 2019 03:59 AM PST

    Lowe's shares dip as sales fall short of Wall Street expectations

    Posted: 27 Feb 2019 03:56 AM PST

    https://www.cnbc.com/2019/02/27/lowes-reports-fourth-quarter-2018-earnings.html

    Lowe's fourth-quarter same-store sales miss analysts' expectations.

    The home improvement retailer cites a weak housing market in Canada as impacting results.

    CEO Marvin Ellison says "U.S. macroeconomic fundamentals remain sound for 2019."

    submitted by /u/coolcomfort123
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    Hyper science

    Posted: 27 Feb 2019 03:34 AM PST

    If I put a grand into this how long before I can see growth or returns. Seems like shairs will be at a set price for a while. Idk their is a lot about this I have questions on.

    submitted by /u/l0st-puppy
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    Anyone here have their Series 3? I have questions.

    Posted: 26 Feb 2019 03:52 PM PST

    I'm considering studying for the Series 3 exam so I can make a career move. To my understanding you don't have to be sponsored by a firm to take the exam. Which benefits someone like me because I can take the exam on my own. If anyone has any experience with trading commodities please tell me about it.

    submitted by /u/howtoreadspaghetti
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    Appeals court upholds decision allowing AT&T to buy Time Warner

    Posted: 26 Feb 2019 07:49 AM PST

    https://www.cnbc.com/2019/02/26/appeals-court-upholds-decision-allowing-att-to-buy-time-warner.html

    In June, U.S. District Court Judge Richard Leon ruled the $85.4 billion bid was legal, and imposed no conditions on the merger.

    The Department of Justice appealed the ruling in July, after AT&T formally closed the deal.

    The case holds wide-ranging impact on the type of vertical integrations that have become common among tech and telecom companies, and has taken on a political bent with regard to the Trump administration.

    submitted by /u/coolcomfort123
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    Home Depot shares fall after earnings miss and retailer's expectations of slowing sales in 2019

    Posted: 26 Feb 2019 06:27 AM PST

    S&P 500: An Unbeatable Index

    Posted: 27 Feb 2019 01:25 AM PST

    Monday on CNBC, Warren Buffet comments that he was unable to beat the S&P 500 and encourages people to invest in the market. The Oracle of Omaha also reveals that even his two investing mentors have also failed to beat it as well, under performing the market by a slim margin. The billionaire investor also gives his opinion, calling the index "the thing that makes the most sense practically all of the time".

    Index finance is the embodiment of an accommodating type of investing. This type of funds are also written in index form, ranging from highest to lowest returning stocks. The S&P 500 is a good example of this kind a kind of index finance, holding top-tier companies such as Apple, Microsoft and Google.

    Buffet also mentioned that if one invests $10,000 in an index type of finance way back in 1942, one would have an investment of $51 million. But even though this is apparent, some investors still strongly believe that this type of investing closely associates with resignation. Regarding this, Christopher Cordaro, Regient Atlantic's chief investment officer advises that the greatest factors as to why people under-perform is their lack of modesty. He comments that people think they are well aware of when to jump in and out of the market or which section of the stocks is going to do well.

    Meanwhile, recent study from Morningstar discovered that in 2018 just 38 percent of functional U.S. stock funds lasted longer than their compliant peer funds. Lastly, Cordaro mentions that buying in the S&P is equivalent to buying in the US economy. He comments that for him that is not even close to being ordinary.

    submitted by /u/kiss_indicator
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    What happened to /u/americanpegasus?

    Posted: 26 Feb 2019 12:07 PM PST

    Is the derivative market decentralized thanks to his idea? Did he release his white paper? Is he a millionaire yet?

    post link of the most controversial post on r/investing: https://www.reddit.com/r/investing/comments/2p8pxw/i_just_decentralized_the_entire_14_trillion

    submitted by /u/etienner
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    JP Morgan Chase says it's in growth mode, expects branches to reach nearly all Americans by 2022

    Posted: 26 Feb 2019 04:57 AM PST

    What happened to COFINA?

    Posted: 26 Feb 2019 11:54 PM PST

    I had "PUERTO RICO SALES TAX FING CORP REV FIRST SUB C B/E OID @95.193 5.35% CPN 5.00000 % MTD 2035-08-01 " and now it has been replaced by "PUERTO RICO SALES TAX FING CORP SALES TAX REV A 1 B/E CAB @23.396 CPN 0.00000 % MTD 2046-07-01 DTD " on Feb 15, 2019. I know that a court case was going on to settle payments of these bonds but I am still unsure as to what happened. Can you someone educate me here?

    submitted by /u/ashishb_net
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    PG&E fell so much on news of bankruptcy, but has gone way up since that low, why?

    Posted: 26 Feb 2019 07:50 PM PST

    Biolase Inc (BIOL). NASDAQ.

    Posted: 26 Feb 2019 10:45 PM PST

    Nice rise with good volume in trade yesterday (Tuesday). The daily chart looking good with the 50MA passing up through the 200MA. Might be worthwhile keeping an eye on this one. Earnings coming out after market Tuesday March 5.

    submitted by /u/RL64
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