Invest into multiple emerging markets, chances are they won't all do bad at the same time, especially if they are in different parts of the globe (take India, Brazil and Indonesia for example), put some into an european index fund, etc.
You seem to be most comfortable with the US market, so the bulk of the assets you decided to invest in equities go there, say 70% and to make things easy put 15% into Europe and 15% into emerging markets. Now you have some diversification, but could still feel comfortable enough to not be worried about your money disappearing over night.
Put your money into it. Walk away.
So what? If your target retirement date was 20+ years in the future, this is arguably the right call. If your retirement date was closer, they still more heavily weighted you toward safer assets.
The fact that they did this before a market crash is irrelevant — nobody can predict these things with any reliability. Not you, not me, not Vanguard.
> They definitely chase performance.
They definitely do not.
> Increased international allocation when they saw it was performing well.
Increased international allocation to track overall market better.
> Besides, they hold international currency-hedged bonds, something that no one seems to be able to come up with a good reason for.
From their website: The fund employs currency hedging strategies to protect against uncertainty in future exchange rates, so investment returns are expected to reflect the underlying performance of international bonds.
Hit this link: http://www.kalzumeus.com/2013/04/24/marketing-for-people-who... and search in the page for Motley Fool.
The only other data point I have to add is that a year or two ago, The Motley Fool published a breathless blog post announcing that 3D printing was about to destroy Chinese manufacturing, and that everyone should invest in companies that make 3D printers or CAD software.
They are a "diversified financial brand" which does a lot of e.g. telling people to get out of credit card debt (a good idea!) and save for retirement (a good idea!). Then they also tell people that "with just a little work, you too can read company numbers and outperform the stock market" (a really bad idea!) and "if you want to do less work, buy our newsletters and we'll give you picks which mumble mumble maybe mumble mumble will make you into Warren Buffet" (a really bad idea!).
[0] https://en.wikipedia.org/wiki/Variance#Sum_of_uncorrelated_v...
You can investment just like Buffet if you Berkshire Hathaway Class B (BRKB). Currently ~$145 per share.
I got that from the introduction to an investment book about Buffet.
His successful leveraged investments are analogous to negative expected value bets that people would typically relegate to degenerates.
He advocates indexing for the little people. This has nothing to do with what he did, or does now. (And there's nothing wrong with that)
It's unlikely even Buffet himself could replicate his initial stock picking success over a long period of time and he would be the first to admit that.
Hint: he never sells.
He sells.
https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_...
FWIW Vanguard has about 35% allocated to international for me, so it's surprising to see that Bogle wouldn't recommend international exposure.
The risks can be higher but so are the rewards. The most important thing is to not just invest in a market blindly. Try your best to understand that market and keep tabs on that market.
You don't have to diversify for the sake for diversification. You can invest domestically and diversify by industries.
[0] https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
Yeah, this is an over-generalization. There are plenty of index funds for European companies at a variety of risk levels, just like in the U.S.
Also, there are worldwide funds too. Capital World Growth and Income Fund (CWGIX) [0] is one example that covers the U.S., Europe, and Asia. Note that this is a mutual fund, not an index fund.
Edit: Perhaps the downvotes are because this is an actively managed fund. The point of giving the example was trying to counter the specific concern OP stated. For passive, a specific Vanguard fund that's similar, at least the closest I found, is Vanguard Total World Stock Index Fund (VTWSX) [1]. It is very diversified.
(All figures quoted above are "price" and ignore dividends, which is bad but I don't have easy access to dividends-included figures.)
Edit: I think I found one — VTWSX is +35% over the same time period. Accounting for fees vs the managed fund, probably means a better return here.
This is the part that kills my ability to "set it and forget it". So many things bother me about this. I know I have to do it (because Japan), but how much and on what markets?
* I don't like the idea of investing in emerging markets. Having grown up in one, I know how shady those can be and how cooked the books are. Growth is often an illusion. If an emerging market is "promising", I'd rather wait until it achieves developed status.
* Developed market indexes are dominated by Japanese stocks, which have gone nowhere in almost 3 decades. You have to accept that a good chunk of your money is going into a no-growth sink.
* I don't know what to expect from Europe. Or even Canada for that matter. When I look at those countries from a distance, I see that 1) their large corporations have been established looong ago (i.e. no new ones are created) and 2) heavy taxation and regulations in those countries doesn't seem to leave much room for profits, at least not as much as in the US. I'm probably wrong though, so please educate me.
I know home bias is supposedly wrong, but the American market is well studied, well known, highly liquid, and there's a cultural aspect to its growth in that its part of the general population's mindset to invest in it for long term goals. I don't think that's the case in all (or even most) countries.
Part of me wants to go full jlcollinsnh/Bogle/Buffet, folks who say you don't need international diversification. Another part of me wants to go as blind as possible into it and just invest in a "world index" ETF like ACWI or VT. And yet another part of me wants to do something in between but has no idea what to do :)