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One of my 20 something sons works for Microsoft in the US, and he recently sold off some of his stock awards. He wants to put the proceeds into an international fund, like Vanguard’s VXUS.

Is that a decent idea? Anyone projecting a global recession any time soon with all the turmoil? Should he drip into an international fund or just buy it all now? I’m so out of the loop on investing outside of the US.

Anyone projecting a global recession any time soon

Yes!

As I mentioned in another thread, there is a very interesting chart on page 36 of Bloomstran's annual letter, detailing the cost of holding "dry powder" cash, waiting for a better opportunity. Using typical numbers, if held three years, an 18%-25% drop in the stock market is needed to break even. At ten years it is up to 48-61%. I find the current times "interesting" and would be hesitant to dump it all in anything, but then my time horizon is unfortunately nothing like a 20-something's.

https://static.fmgsuite.com/media/documents/209f84...

That’s a great chart, and it kind of confirms what he’s thinking.

I told him maybe just hold onto to the cash for now since everything is so uncertain, but I’m old and always worried. He has a very long time horizon and he really doesn’t like thinking about financial things, so he wants to just do it now.

One of my 20 something sons works for Microsoft in the US, and he recently sold off some of his stock awards. He wants to put the proceeds into an international fund, like Vanguard’s VXUS.

Is that a decent idea? Anyone projecting a global recession any time soon with all the turmoil? Should he drip into an international fund or just buy it all now? I’m so out of the loop on investing outside of the US.

Interestingly I have been having discussions with some of my kids now that they have money to invest. I want them to learn a couple of things that will help them long after I am around.

1. Timing the market is hard and generally a bad idea
2. The price you pay determines the return you get

These might seem counter to each other, but the advice I have been giving is to determine a good entry based on assumptions that you have confidence in; then just pull the trigger.

To that end; both of my daughters have elected to hold cash right now and defer their equity purchases until conditions are more attractive.

tecmo
...

PS: They are generally in index funds; but one recently purchased GOOG back in the fall at $150 - which she was proud of! She wants to buy more....

I have 3 investments that make up the vast majority of my portfolio: 1)BRK.B, 2) VXUS/VSS, and 3) IJR.

Vanguard Total International Stock Index Fund ETF (VXUS) would probably be fine but I personally prefer Vanguard FTSE All-World ex-US Small-Cap Index ETF (VSS) for the same reasons many on this board prefer RSP over SPY right now. Less top heavy/more diversified and better valuation. I own some of both. However, the EPS growth hasn't been there for the international indices as revenue (in USD at least) has been essentially flat for the past 17 years. https://yardeni.com/charts/all-country-world-ex-us...

Domestically, I am currently gobbling up as many iShares Core S&P Small-Cap ETF (IJR) [S&P 600 basically] shares as I can on this dip @ approx 16x P/E, 1.6x P/BV, 1x P/S which to me is a very fair price for an asset which has and should continue to produce 6-8% EPS growth long-term.

One of my 20 something sons works for Microsoft in the US, and he recently sold off some of his stock awards. He wants to put the proceeds into an international fund, like Vanguard’s VXUS.

Is that a decent idea? Anyone projecting a global recession any time soon with all the turmoil? Should he drip into an international fund or just buy it all now? I’m so out of the loop on investing outside of the US.

I recently posted what Ken Fisher's projection was, I think on the MI board.

In a nutshell, he expects that in 2025 value and non-US will be best. He's expecting an up year, maybe in the +15% range.

IMHO, emerging markets is to be avoided, thus VEA is what I use.

The statistics say that if you are going to invest a lump sum, buy it all at once instead of dripping.

Also, prepare to be disappointed. The market goes down as well as up.

After reading all the posts on this thread, I ran a backtest on testfol.io. Limited by the inception date of VXUS to 1/28/2011.

Of the three, VEA, VXUS, VSS, that's the order of CAGRs.
https://testfol.io/?s=ffBkXkbGNvn


Then added VOO. Eye opening. https://testfol.io/?s=6Z5mSKACyNj

Add BRK-B to them and see how it compares. Yikes.

Add VTI and see how it compares. Yikes again.

There is a saying "“When America Sneezes, the rest of the world catches a cold." and "When America gets a cold, the rest of the world gets the flu."

Looking at the energy problems that Germany, France, etc. are having it is hard to think their economies will be great.


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FWIW, the weekly Global Equities Momentum (GEM) model has been US (VTI) since 6/25/2023.
VEA was the pick from 1/08/23 to 6/25/23.
https://www.optimalmomentum.com/extended-backtest-...

Since I have been tracking it weekly since 8/3/2008,
VEA was the pick 118 times and VTI 571 times. And AGG 161 times.

In the range 1/9/2011 to now, VEA 94 times, VTI 528 times. CAGR 8.4%
VEA 1/9/11 to now = 5.65%
VTI 1/9/11 to now = 13.2%

It's very true, as Jim once said (paraphrasing), buying US large cap growth has been an unbeatable strategy in the recent past.
It's hard to know how to project that into the future. I am actually overweight in foreign and small cap stocks. Not based on any insight except their PEG ratios seemed to be more reasonable.
Emerging markets are obviously dangerous to invest in, with fat negative tails. Still probably good for returns if all the swans in your investment lifetime all turn out to be white. I am good with China, going forward.
A while ago I had posted about NSRGY and RHHBY, since then both are up 20+%. Steady foreign large caps with regular dividends has recently been a good hiding place (again, only for me, may or may not suit someone else).

For a twenty-something, maybe VT isn't a bad choice. Or if they care about foreign tax credit (eg in taxable accounts), 60/40 VTI/VXUS to KISS. Time in the market than timing the market, etc. Oh and very important, put 80-90% in these, keep the other 10-20% in Robinhood for them to play with crypto, futures, options, meme stocks etc. So they won't get bored and gamble with ALL the money. I am not kidding. Even Ben Graham (paraphrasing again) said that the main attraction of rebalancing or a regular system of trades is that it gives the investors something to do. His emphasis, not mine.

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