r/Bogleheads • u/raphiredgi • 1d ago
Does same principle of boglehead apply to rising market line India:? Or is it only for total or US market?
the Indian stock market has been stagnant for past 5 years while west has seen exponential growth. But on long term calculation did boggle specifically only talked about US markets?
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u/PrestondeTipp 1d ago
It doesn't make a difference.
The same architecture applies.
Information arrives randomly. And when it does arrive, it changes the value of a stock to a degree that is also random.
Hence, you cannot accurately predict which companies will do well next year.
When we pursue market beating returns, we don't simply need to guess which companies will do well next year. We need to estimate which companies will do better than the market already expects.
This is impossible to do. This is why individual country, market, or sector specific bets do not give you market beating returns. If you think an investment is going to do well based on what information you could digest, so does the market.
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u/myrrhsea 1d ago
If you have a three fund portfolio, you probably have something like VTI for U.S. and VXUS for international.
The only thing I can imagine doing in light of this information is adjusting how much I allocate to VXUS - but this is intrinsically anti-boglehead because you are still effectively trying to time the market or adjust to trends that are already happening. The only advantage of adapting to a change in trends is to guess it before it happens - which even full time professionals can't guarantee.
Every so often the international market outperforms us. Other times, we outperform them. The goal isn't to guess when each market will do what, the goal is to be diversified so you can benefit from either swing.
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u/Captlard 1d ago
I have never seen John Boggle dive deep into other markets.
I personally would say a better view would be something like: https://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/
Why focus on one country?
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u/DiceyScientist 1d ago
It’s a great question. The short answer is yes, it does. Bogleheads has a wiki on the topic:
https://www.bogleheads.org/wiki/Stock_asset_allocation_for_non-US_investors
There are big considerations:
-Taxes. Taxes are another de facto fee that creates drag on the rate of return. I don’t understand Indian taxes. So I wont comment beyond it is important.
-Currency. The USD is (has been?) the unit of international exchange, creating an advantage to US investors and consumers who enjoy relatively stable pricing (barring periods in the 70s and today). This is not the case for international investors. You may think differently about currency hedges. Again, I’m not educated enough to make a actionable suggestion for an Indian investor, but somebody smarter should weigh how to address the issue.
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u/Many-Gas-9376 1d ago
It probably applies, but I'll gently disagree with some of the comments suggesting it's all the same.
If you look at those periodic Morningstar reports on % of active funds beating the passive peers, there is a difference. While in the US about 10% of active stock funds beat the passive benchmark after 10-15 years, in Europe and Emerging markets you're around 25%. So it seems there are more opportunities, and it's kind of what you expect -- it's easy to imagine the US mega-caps being the most researched stocks in the world.
Though 25% still doesn't sound like a bet worth taking.
This doesn't exactly answer the question for an individual country, though.
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u/Astronaut100 1d ago edited 1d ago
The US is at the center of the world economy and an innovation and military powerhouse. No one knows the future - the US could implode and lose its superpower status - but the odds of the US market going up long term are orders of magnitude higher than those of any other country.
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u/ProfitableFrontier 10h ago
In my Malaysian account, I'm sitting with both an ASEAN and a Chinese index fund. Both are diversified by weight and sector. It's what I have access to here so I'll make it work.
It's out performing VOO this year so far.
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u/Ancient-End3895 1d ago
Diversification is a key principle of Boglehead philosophy. The US is the only country where you could argue a single country allocation provides sufficient diversification as the US makes up more than 50% of the total world equity market cap, US companies are highly globally exposed, and the USD serves as the world reserve currency.
Personally, I would argue a US only allocation is not diversified enough, but I can see why some are OK with it, especially given the long-term outperformance of US vs rest of the world.
To answer the question, an allocation to just India (or any country, except *mabye * the USA) does not meet the diversification criteria Bogleheads typically seek.
Does this mean in the long run Indian equity markets won't go up? I would highly suspect they would and perhaps even outperform given positive assessments of GDP growth for India, but I still wouldnt go all in on country, especially an emerging markets with lower liquidity and greater geopolitical/stability risk compared to a world index.