"Kalvin McCormick" <kalvinmccormick[at]htmail.com> wrote in message news:<OmAkb.830087$uu5.146465[at]sccrnsc04> ...
- quote -

You could sensibly hold up to 20%. Funds I would look at include the
Vanguard Total international market fund, Dodge and Cox, Causeway
(very smart people who are ex Merrill Lynch, have a good value driven
methodology). I would trade this off against some of your large cap
SP500 exposure. What you want is a fund that does not hedge currency,
and I haven't dug into the prospectuses of these 3 funds to find out
which ones do/ do not. I would not hold more than 10% in any one
fund.


Beyond 20% in foreign currencies for a US based investor would be
taking on a lot of currency risk.

Agreed that the US Dollar will decline vs the Euro. One useful strategy is
to set up a series of laddered CD's denominated in Euro's and enjoy the
fruits of such a decline as well as a reasonable interest rate on the
savings. Check the Web site for Everbank for details on Currency CD's. I am
a customer and not a shill for them. I have such a ladder in place for
nearly a year which I adjust quarterly.



"darkness" <darkness39[at]yahoo.com> wrote in message
news:17f41cc6.0310221314.5df5d24b[at]posting.google.com...
- quote -

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message news:<doklb.9981$Ec1.903531[at]bgtnsc05-news.ops.worldnet.att.net> ...
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Given the depth and liquidity of US markets, and the fact that the US
as an economy imports relatively little (ie the consumption of US
consumers is mostly domestic goods and services) I cannot make a case
for more than 25% foreign assets. I would rather see someone put 10%
in a small cap value fund as a diversification element in the
portfolio.

HOWEVER

US markets look expensive by any measure (PE etc.). And my call on
the dollar is that to correct the current account deficit (or rather,
as part and parcel of its correction) the dollar needs to come down by
20% v. the rest of the world (ie from about neutral valuation on a
Purchasing Power Parity basis to a significant undervaluation).

Therefore, I can get to 35-40% under current conditions. But that is
very much the high end for the average US investor. For people with
less than, say, $150k to play with, I would suggest 10% in a good
international stock fund is about all they need.

"zak" <zhendsch[at]yahoo.com> wrote in message
news:a7a1bede.0310210338.503bc9e0[at]posting.google.com...
- quote -

A few years ago, perhaps as many as 6 or 7, I was watching Jimmy Rogers who
opined very similarly, except I recall his figures were more like 35-38%
international holding. Thank you for taking the time to answer my question.
I happened to hit a time when this was not such a good idea and it spooked
me off, so my holding is more in line with my own risk tolerance. Even if
holding US stocks is still risky, or even riskier than a 35/65 mix, it's the
one with which I'm comfortable.

Elizabeth Richardson

"jt" <daft[at]hotmail.com> wrote in message
news:be594162.0310211345.3403cce8[at]posting.google.com...
- quote -

I have a different take on these newsgroups, a public discourse that is open
for alternatives to join in. But I don't have a problem with your take on
them. The degree is from Northeastern University.
- quote -

My investment is wildly moving, up or down 50%. I understand that the
inverse benefit or hardship will affect my consumer habit, but as part of an
investment portfolio that is not ultrashort term in focus do you make
international part of the package. You couldn't reasonably put more than 10%
of your portfolio into this situation.


- quote -

I agree that international should be part of asset allocation, I just think
there is a risk factor that impacts here. Though the global factors of large
caps has it spreading more.

- quote -

- quote -

When you pose a question on a newsgroup, it's not a service organization
that knows and tailors an answer for you, period. It becomes a general
query for the utility of thousands of lurkers - that's how you pay your
dues for eyetime. However, it might help in shaping replies if you
indicated what institution gave you such a degree.

- quote -

Say you find you spend $5000 per decade for products in country X.
Invest $5000 in ultrashort bonds in that currency. Over the years
that investment may double or halve due to currency fluctuations.
But you don't care - the risk has been eliminated - you can keep
spending twice or half as much of USD$ for those same foreign
products sold in US stores using original self adjusting investment.

- quote -

That's an odd example; review your question below. Even if it was
possible to buy a Chinese bond, isn't the currency is currently pegged
as I had originally suggested? Yes, years from now a negative move is
expected since PRC has committed to unpeg from USD. I think the PRC
forbids foreigners from owning their stock, bonds, or even cash.

- quote -

The point was how to lower risk of your own currency losing buying power.
I proposed how to do this more selectively without bringing in added
issues of foreign equity/long bond fluctuations, but it's fair to want a
stake in them too to reduce risk from your own economy. In the 1987 crash
you could take a lot of comfort from intnl portfolios, as well as during
other hard NYSE times.

- quote -

If the US Government prevents the free exchange of currency by it's citizens
while Corporations can do what they wish then this country is not worth
living in. Otherwise exchange risk is basically no different than any other
market risk. If you invest in a Multi-National Corporation your investment
is also subject to political risk. I don't understand your objections. But I
agree, no one should dismiss any risk out of hand and I don't think anyone
in this thread did.

"BMS" <mcfared[at]comcast.net> wrote in message
news:5_7lb.323771$mp.262988[at]rwcrnsc51.ops.asp.att.net...
- quote -

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message news:<bjBkb.184826$0v4.14306453[at]bgtnsc04-news.ops.worldnet.att.net> ...
- quote -

This seems like it could be the most useful branch of this thread.
I'll jump in since it's being ignored, although I am by no means an
expert. The argument I'll give is paraphrased from my memory of "The
Intelligent Asset Allocator" by William Bernstein.

One would expect foreign stock markets to have similar returns as US
markets, and historically this has been the case. Since they are are
not perfectly correlated, you can reduce your risk by mixing US and
foreign stocks. Since the expected returns are about the same, you
don't decrease your expected portfolio return by mixing in foreign
stocks (as you do when you decrease volatility by adding bonds), so
you should decrease the volatility as much as possible. When "The
Intelligent Asset Allocator" was written, the US market cap was about
half the world market cap, this corresponded to a 50/50 mix of US and
international stocks. However, if you extend the math, one sees that
the lowest volatility (still with the same expected return) would be
achieved by holding all stocks (domestic and international) in
preportion to their market cap. However, he argues (by citation,
without showing the math) that because you consume your returns in
local currency, you take on too much currency risk by going more than
50% international, even if you are from a country with a relatively
small economy. So for nearly everyone, an efficient frontier MPT
portfolio will be 50/50 domestic and international.

He extends this argument to also account for the bond portion of the
portfolio.

Separately he notes that the benefits of diversification are not
linear. So you gain much more diversification by adding an asset class
from 0 to 10% of your portfolio than from 40 to 50% of your portfolio.
He describes the risk return profile of anything from 30-70% as being
virtually identical. I believe he recommends that people sensitive to
tracking error keep only about 25% in foreign investments rather than
the 50% "ideal" portfolio.

I have my degree in Economics, so spare me the theory.

Two real risk factors are foreign exchange, the getting coin back that you
can use. At last check the supermarket doesn't take euros.

The other is political risk. A report today has that the Chinese banking
system is massively unstable and that its currency is about 40% undervalued.
Add to that mix the protectionism rumblings coming from Washington due to
manufacturers that are losing markets to the Chinese in particular.

I'm not against global markets, but there is risk that has to be considered
and dismissing it out of hand is not prudent.

"jt" <daft[at]hotmail.com> wrote in message
news:be594162.0310201522.7dc87e77[at]posting.google.com...
- quote -

Never mind the trash about new world order.

How about the real issue of giving local currency, having it invested and
then getting back out into local currency. There is a risk that the coin you
put in today won't be worth as much coming out. That's risk.

"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message
news:dnm7pvsgdb5ieqdcrnu0tq8rr20jbg1rrt[at]4ax.com...
- quote -

- quote -

The whole point was to target currency "risk" or opportunity, without mixing
in the risk of intnl stock or long term bond fluctuations. That's not only
diversification, but to handle the risk of your own currency declining.

Think how many imports you'll be buying as well as any visits to euro or
canuck hotels for instance. You risk a falling dollar making these more
expensive, so why not invest in a basket of foreign currencies with the
low-volatile part of your portfolio. Actually the huge amount of imports
americans buy is often from dollar pegged currencies of workaholic asia
rather than much of anything from euroland, but not all.

You can mix it all up with diversified fgblx for instance, but I think
they and their ilk probably go too long on bonds now - any counterexamples?
I never bought the concept of foreign exchange being a risk anyway. If
you bring in an added variable, it just as likely will cancel out trouble
in the original variable as exascerbate it.

An example is crossing oceans in multiengine airliners. Do you prefer
the new trend in using 2 engine 767's to cross the Pacific rather than
4 engine jumbo's - after all there is more risk of engine failure with
more engines? Of course not, when there is more diversification the
slack can be picked up. In the next few months this may turn into real
pain for passengers crossing central/south pacific since WW2 era atoll
airbases like midway are proposing to close which will make 2 engine
airliners add hours to their routes to stay in reach of emergency landing.

- quote -

You should consider mutual fund newsleters. I have been subscribing
to Fidelity Monitor for about 10 years now and I like it. There is a
discussion of whats going on an several portfolios to choose from.

Frank

Gimme a break Rich, a "proper" Asset mix differs with 1. the investor's
changing situation, 2. the economic environment in all it's dimensions, and
3. over time. Buy and Hold is simply baloney.

The Wall Street and large US Corporate players have proven that the average
investor cannot trust their financial reports or what they tell us. We are
told to ignore GAAP "Generally Accepted Accounting Principals" accounting
reports and to use some trumped up scorecard using a thing called EBITA(sic)
which allows them to cook a Witches brew of phantom sales and vaporous
earnings..

And finally we are told to ignore historic and current Price/Earnings ratios
for equities but rather to plug in their future earnings "estimate" because
many of these companies don't have earnings and are not likely to ever have
any! Wall Street calls it momentum investing; it used to be called a Ponzi
scheme.

Capitalism without morality and ethics is evil.



"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote in message
news:uk771b051.fsf[at]animato.arlington.ma.us...
- quote -

On 20 Oct 2003 12:45:01 GMT, "Nashville Pete" <poremski[at]comcast.netwrote:

- quote -

What is "New World Order"?

How does it differ from the "New Economy" of the late-1990s in USA?


-HW "Skip" Weldon
Columbia, SC

How much do you discount international bonds for the added risk of foreign
exchange?

"jt" <daft[at]hotmail.com> wrote in message
news:be594162.0310192344.64e94c35[at]posting.google.com...
- quote -

Foreign Exchange or rather, unhedged foreign investment, is no longer a
"Risk" but rather a means of adding diversity to your portfolio in these
days of the "New World Order".


"BMS" <mcfared[at]comcast.net> wrote in message
news:m5Pkb.596638$Oz4.589848[at]rwcrnsc54...
- quote -

- quote -

Why stock rather than intnl bonds? Note your twiex has done poorly
relative to sp500 last 1, 3, or 10 years. Even poorly vs eafe index
for the periods I could pull up. I would contend that managed intnl
funds may have brief hot periods but are VERY hit and miss over long
terms (worse are the "global" funds who may swing into domestic
stocks at the worst time). I could give many examples from hard
experience, but bottom line is managed intnl funds must be watched.

The normal antidote to above problem is some intnl index fund, but I
suggest there is a scarcity of them and you usually will get lumped
in some major economy or currency in long term decline. An alternative
is to pick a focused index like pac-rim, lat-am, east-euro, or japan
but again you'd have to watch/trade. So how to play currencies...

Why not intnl bonds? fnmix's total return just pulverizes twiex
over 1, 3, 5, or 10 years; begbx for the most part does also. Of
course high return bond funds like those may be the most vulnerable
to impending interest rate rises, so why not intnl short bonds (must
avoid those tricky ones that hedge/neutralize currency changes).

The problem seems to be a scarcity of intnl short bond fund plays -
any suggestions? I see a list of etf candidates under
http://www.etfconnect.com/select/cef...onal_fixed.asp
but some look scary with market premiums, etc. There are of course
intnl stock etfs such as efa index or indiv countries...

"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote in message
- quote -

Can you pose an argument for a larger international holding?

Elizabeth Richardson

How much should I hold in international stocks 20% or more? What do you
recommend as an all around allocation?
"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote in message
news:uk771b051.fsf[at]animato.arlington.ma.us...
- quote -

"Nashville Pete" <poremski[at]comcast.net> writes:

- quote -

And "buy and hold" is not contradicted by a single
word you said. Further, "Wall Street" has no love
for "buy and hold" -- it wants "churn and burn".

The key is to buy and hold a proper asset mix. And
one can make a good argument that only 10% international
is not a good asset mix.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us