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few thoughts
larryswedroe
05-10-2002, 4:36 PM | Post #1287388
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1-the time horizon and diversification issue is one of the "mistakes" I address in my new book-IMO investors get it exactly backwards--the shorter the horizon the more important it is to diversify across asset classes--reason is that over the long term returns are likely to be similar--even for lg and sv in US the return difference is "only" 5% a year over 75 years- but how about for 20 years say from 66-85 -lg returns 7.1 and sv 17.6 or over 10% a year, and over shorter periods like last two years difference even greater.
75-89 Int'l large returned 26% pa and S&P returned 16.6--US loses by almost 10% a year--so if you said you only had 15 years you lost out on a lot. Of course in next 13 years it worked the other way.. Too bad we cannot know which will win when (:-))
2_ I know Bill Schultheis very well and I believe that today if he were to write that book he would write it to be more of slice and dice and int'l investor---we actually talked about writing that book together but can't get Bill to focus on it
3-It is more important I believe for seniors to own int'l--the reason has to do with inflation risk---which they are generally more exposed to as their earned income will no longer be going up with inflation. By owning int'l they protect against falling dollar and its impact on cost of living.
Originally posted in thread: 19630
Topics
falling dollar
focus
horizon
international diversification
LG
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