• 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:

    Collections: The Queen’s Latin or Who Were the Romans? Part IV: The Color of Purple

    This is the fourth part (I, II, III) of our series asking the question “Who were the Romans?” and contrasting the answer we get from the historical evidence with the pop-cultural image of the Romans as a culturally and ethnically homogeneous society typic…

    via A Collection of Unmitigated Pedantry July 23, 2021

    The Leakage Problem

    I’ve spent more than ten years talking about the cost of construction of physical infrastructure, starting with subways and then branching on to other things, most. And yet there’s a problem of comparable size when discussing infrastructure waste, which, …

    via Pedestrian Observations July 23, 2021

    Songs about terrible relationships

    [Spoilers for several old musicals.] TV Tropes lists dozens of examples of the “I want” song (where the hero of a musical sings about their dream of escaping their small surroundings). After watching a bunch of musicals on maternity leave, I’m wondering h…

    via The whole sky July 17, 2021

    more     (via openring)


  • Posts
  • RSS
  • ◂◂RSS
  • Contact