Jack Bogle: Trump Is Wrong, ETFs Are Bogus and Foreign Investing Is Useless by Nora Morrison, TheStreet
H/T Dataroma
Bogle is “not on board with international investing,” he said flatly. “I don’t do international. I never have.”
Many investors disagree with him, but he’s firmly convinced that most investors don’t need international investments. If they want international funds, he doesn’t recommend putting more than 20% of an equity portfolio in those stocks. He doesn’t see international bonds as appealing at all.
“If you invest in the S&P 500 (SPY) , you own an international portfolio,” Bogle said. Around 50% of your revenue comes from outside the U.S. under those conditions, he remarked, and that’s plenty. He also pointed out that the correlation between U.S. and international company performance has been converging, so there is less of a diversification benefit than there used to be.
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The U.S. is the most innovative and entrepreneurial country in the world, Bogle remarked, and investing there should be good enough for U.S. investors. It also avoids currency risk and risks in international countries, plus domestic investing is cheaper. Plus, the U.S. has the strongest financial institutions and shareholder protections in the world, Bogle said.
Then Bogle played the Warren Buffett card. When Buffett decided to leave his wife’s inheritance in the S&P 500-benchmarked Vanguard 500 Index Fund (VFINX) (VFIAX) (VOO) , he effectively decided to opt for a purely domestic investment for his wife.
Saint Jack’ vs. The Donald
Donald Trump and Bogle don’t agree on one big point, Bogle said.
Bogle tries to impress on investors that average results are exactly what they should seek — market returns that have very low transaction costs and don’t risk underperformance or a lack of diversification.
Enough. That’s the title of Bogle’s book urging readers to change their perspective and think about financial and personal success in light of what’s enough, not in terms of trying to get more, more, more.
