• Posts
  • RSS
  • ◂◂RSS
  • Contact

  • Index Funds: US vs International

    May 23rd, 2018
    money  [html]
    I think the efficient market hypothesis is basically right, in the sense that I'm not not going to be able to beat the average return, and so I'd more or less like to hold an even slice of everything there is to own. Talking to people and reading online, it seems like it's common to invest ~60% in the US and ~40% internationally. Why is that? The US total stock market cap is only about 30-40% of the world's, so I'd think the default position would be to mirror that, perhaps by buying shares in a total-world index. Reasons I've heard for weighting the US higher seem to be based on things like the US having higher returns historically, but that should be priced in.

    If anything, I think for Americans overweighting international stocks would make more sense, since we're already very long on the US. Similarly, if there were an index fund that excluded tech I think that would be a good buy for me since I'm effectively quite long there through my investment of being a programmer.

    What's going on? Why does "index fund" typically mean "S&P 500" and not "total world"?

    (It looks like maybe this is called "home bias" and economists think people shouldn't do it?)

    Comment via: google plus, facebook

    Recent posts on blogs I like:

    Economics: not as bad as I thought

    Also, it's not all about money. The post Economics: not as bad as I thought appeared first on Otherwise.

    via Otherwise May 13, 2022

    Buckingham Palace

    I love England. Especially because of the big castle called Buckingham Palace. I got to see the outside there, but my mom showed me some pictures of the inside. I love it there. But the outside doesn't look very fancy to me. But I never knew why those …

    via Anna Wise's Blog Posts April 25, 2022

    What is causality to an evidential decision theorist?

    (Subsumed by: Timeless Decision Theory, EDT=CDT) People sometimes object to evidential decision theory by saying: “It seems like the distinction between correlation and causation is really important to making good decisions in practice. So how can a theor…

    via The sideways view April 17, 2022

    more     (via openring)


  • Posts
  • RSS
  • ◂◂RSS
  • Contact