“International exposure isn’t a fad”

I didn’t say it was.

“Twenty percent is a good percentage, but a recent paper that can be found on Vanguard’s site says 30% is optimal.”

Please provide a link/url (Vanguard ‘paper’ you mentioned) to the information you mentioned so readers can follow up information. As far as I know, Vanguard has most recently advised most smaller investors to stay close to a 20% International allocation, as increased allocations on up to 50% show greatly diminished
advantages in lieu of the risk/return vector.
I recommend a Vanguard PDF file (’Portfolio Construction for Taxable Investors’ – disregard the word ‘taxable’ in the name, as this is an excellent educational tool for most people needing sound advice) which offers a concise guide for modern portfolio construction.

International exposure isn’t a fad; it is a necessity. Over 50% of the world’s capitalization is outside the US now. So an investor who ignores international equities is giving up on 50% of the world’s investing options.

Twenty percent is a good percentage, but a recent paper that can be found on Vanguard’s site says 30% is optimal. While 40% might even be better, Vanguard claims the cost of investing outweighs the gain so 30% is best.

But, I think adding REITs and commodities is also essential for a portfolio. Both have low or negative correlations to US stocks and bonds.

I wouldn’t buy shares just to say I owned them more than I would buy a specific car or television just to say I owned that type. Many people are impressed with those types of things though, so it is an interesting idea, and a relatively cheap way to buy something to impress people.

Another suggestion would be to get in on the Cramer hype, pick a few stocks that get some press, and do the type of homework he suggests. Then you can talk about popular picks but have enough detail to impress people who only know the news and hype.

I can tell you, that for me, buying and watching individual stock is way more exciting than buying mutual funds or index funds. Since I’m only budgeting $4000 in stock purchases I’m not too worried about the performance.

Me too, but some index fund investors try to get to cute with a good, simple concept, by: 1. collecting too many index funds, 2. trying to chase performance, and by 3. shifting their allocations to favor one or two sectors. The current darling in the game is to load up on International exposure with allocations from 20% to up past 50%. I’ve read several ‘respected’ indexers suggesting 40% international as appropriate for most small investors. I believe this is a mistake, and 20% is more appropriate for most investors.

A spin over to: http://www.diehards.org

demonstrates that some indexers are still hunting for that elusive edge to increase their portfolio returns, but fortunately most remain committed Bogleheads.

We invest in the total market…. boring! But I do belong to an Investment Club, so I could always spout off those holdings if needed.