I’ve recently come across articles advocating a higher percentage to global equities vs what the average investor in the USA has (if any). The argument goes that US stocks have outperformed global equities for too many years, and that history shows that there are periods of time when that reverses and it appears “overdue”.
In the US we’ve been historically limited to AMDWX which has chronically underperformed since inception, and beginning this year there’s this new option UMMA from Wahed that has been trending downward with the US market so far.
Does anyone have strong opinions for or against investing in either of these at this point, and if for then what percentage of your portfolio are you allocating to them (for retirmenent or taxable investments)? Googling “how much of portfolio in international stocks” will give a wide range of opinions, with most suggesting a nonzero value with a notable exception: https://www.cnbc.com/2017/04/17/a-stubborn-investing-rule-shared-by-jack-bogle-and-warren-buffett.html
I can appreciate the simple approach of equally allocating among portfolio options, especially if someone is inclined to tune their portfolio weights and ends up chasing performance (risking buying high then selling low).
Seeing the US vs international stock performance cycles in the second link suggests that once international or US stocks start to outperform, it tends to continue for some time before things reverse. One way someone could interpret this is to attempt to time entrances and exits based on when one class starts performing better than the other for a period of time, though it can’t be foolproof to do so. It’s quite possible things switch more rapidly in the future in such a way that would mess things up for someone trying to be smart about timing their allocations.
I’d just have a mixed bag of global equities, and just expect and accept that one part of the world will do better than the other for possible long periods of time, e.g. for 10 years you might see Emerging Markets doing better, or it might be for 4 years.
Trying to time the market is pretty hard…I wouldn’t try it unless you are pretty expert at it…as most people will get it wrong and buy high and sell low.