Quote:
Originally Posted by jalexand42
Wait, are you arguing that picking individual stocks isn't more volatile/risky than customizing an allocation to broad indexes? We can agree to disagree....but if you think it's the 'same', I think THAT is hilarious.
Picking individual stocks is significantly less volatile/risky and has a higher return. If you pick garden variety solid US businesses at low P/Es (below 12 or so), then you're gonna crush your emerging markets bets and the high P/Es which are included in the index, by all the historical data we have. Besides which, plenty of US business have large international components, and are best-in-class, which makes it even more stupid to buy international markets with second best in class. You want to own the companies with diversified global revenue streams that employ the world's best people with the largest moats at cheap prices. That's the core generator of reliable ultra low risk wealth and resilience. The rest is nonsense and comes with a lot of risk.
Quote:
I will also easily admit that you can do WAY better stock picking, but you can also do WAY worse. You won't find any argument from me that what I'm doing is an attempt at timing the market / responding to macro trends, particularly on valuation.
It just all seems frustratingly dumb, hence the post. This much of US small cap and large cap and this much of this type of international and this much of another type of international..what's the point? Go do something fun instead of thinking about reallocating, you'll be more productive. There's close to zero alpha in the process imo. As juan says, they're all highly correlated and You Gonna...Get gently reminded not buy correlated assets the next time we have a global recession. If you want to diversify away from risk, you buy solid companies. Look at how low P/Es did in the 2001 crash vs the index. They killed it.
Quote:
Responding to your second point...do you feel the same way about International stocks/EM in the short/medium term? Because my tilting international/EM is definitely about the short/medium term.
If you've been in for a while, congrats on the run off lows, that's a nice return, although not much more than QQQ (perhaps with lower risk?). Beyond that I don't really study international macro so I have nothing intelligent to say on short to medium term trends.
Quote:
Additionally, I should probably point out that the majority of my net worth is in my business ownership. My portfolio isn't insignificant, but it's not the majority of my 'nest egg'.
Sure.