Thanks. Even at a 50/50 allocation as an American I scratch my head sometimes. On one hand I’m almost 15% tilted away, on the other I’m still better half my retirement on the horse that has always won, and it’s getting tired. Sobering article, thanks.
The Japan-1989 comparison is the sharpest thing here, because it is not hypothetical anymore.
Across this month's coverage universe America sits at 54.8% overweight regionally with barely 3% underweight, roughly the same lopsided conviction that preceded thirty-one lost years for a Japanese home-bias investor.
Concentration always looks like conviction until the data catches up with the currency it was priced in.
Thank you very much for this insightful article and the illustrative graphs! Indeed, the top countries are the ones who never had (external) war on their territory. I recently read the study by DB (Oct 25, The Ultimate Guide to Long-Term Investing), which goes in a similar direction, but also compares bonds, currencies and gold.
Most long-horizon research covers 30 to 50 years, essentially one investing lifetime. The trouble is, we can't predict how generous the market will be during ours.
Looking across 150 years and 16 countries turns one historical outcome into a broader distribution. Even when adjusting for survivorship bias, that distribution skews positive. To be clear: this isn't a warning against owning equities.
Stocks did what they were supposed to do in most markets. The wide dispersion of returns is precisely why diversification works, though achieving real diversification is harder than most people think.
Great article.
I always hated when people believe “All stocks go up in the long term all the time. Look at history” It ignores the realities your article points out.
I love this dataset. There’s just so much you can do with it.
Thanks. Even at a 50/50 allocation as an American I scratch my head sometimes. On one hand I’m almost 15% tilted away, on the other I’m still better half my retirement on the horse that has always won, and it’s getting tired. Sobering article, thanks.
The Japan-1989 comparison is the sharpest thing here, because it is not hypothetical anymore.
Across this month's coverage universe America sits at 54.8% overweight regionally with barely 3% underweight, roughly the same lopsided conviction that preceded thirty-one lost years for a Japanese home-bias investor.
Concentration always looks like conviction until the data catches up with the currency it was priced in.
Thank you very much for this insightful article and the illustrative graphs! Indeed, the top countries are the ones who never had (external) war on their territory. I recently read the study by DB (Oct 25, The Ultimate Guide to Long-Term Investing), which goes in a similar direction, but also compares bonds, currencies and gold.
Most long-horizon research covers 30 to 50 years, essentially one investing lifetime. The trouble is, we can't predict how generous the market will be during ours.
Looking across 150 years and 16 countries turns one historical outcome into a broader distribution. Even when adjusting for survivorship bias, that distribution skews positive. To be clear: this isn't a warning against owning equities.
Stocks did what they were supposed to do in most markets. The wide dispersion of returns is precisely why diversification works, though achieving real diversification is harder than most people think.
Another great article thank you for your generosity!