Comments by "JP 72" (@739jep) on "International Diversification" video.

  1. He’s not favouring international securities over American ones - he’s highlighting the importance of international diversification which is very different. I would say he gave a fair representation of where the literature is at regarding this issue. Maybe im wrong though. Have you got your own research that mirrors the quality of the studies referenced here that paints a different picture?
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  2.  @soshityo  ‘S&P 500,’ Warren Buffet on index funds, being wrong yet again
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  3. ‘Is there nothing about US laws, government, society or geography that gives them an advantage?’ Even if we were to assume that the US is special , this is about investing - youd also have to assume that this perceived advantage isn’t priced into US stocks before not diversifying internationally might make sense. It seems like your comment is just applying the good company good investment fallacy on the national scale is it not?
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  4. What makes it a ‘free lunch’ is that it reduces risk of a portfolio without reducing expected returns.
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  5. They’re systematic
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  6.  @gmk22799898  it’s a little tricky to explain , I’ll try my best. You seem to understand the difference between the two so I guess you’re wondering why value and size are considered systematic because firms have different price to book values and different sizes - whereas with market risk all companies are exposed to the same inflation rate for example (more on that later) ? I think I understand the confusion. There’s maybe two ways to approach it. Firstly I think it might be helpful if we suspend the thought that an entire market (as in the whole stock market) needs to be exposed to the risk in question for it to be systematic. With size and value for example I think it might helpful to think of small cap stocks and value stocks as being their own market. These markets as a whole are riskier than their counterparts (large cap / growth ) in the same way ‘the market’ is riskier than US treasury bills. Now remembering that if we consider small cap and value stocks to be their own market - then If you were to only buy small caps / only buy value stocks , it doenst matter how many small cap value stocks you buy , you would not be able to diversify away the risks specific to those markets. Keeping this in mind you could also look at it mathematically. Just like with the market premium (rm- rf) factors can be expressed this way as well (SMB and HML). This creates constants for which portfolios and/or individual stocks can have their sensitivity to these variables measured against. This might be useful to understand the concept. Take (rm-rf) for example - all companies are exposed to inflation risk for example yet all companies in reality face different rates of inflation - but we’re still able to express each companies exposure to (rm-rf) the same can be done for value stocks even if they all have different price to book values. I hope that helps , it’s kind of hard to put into words - I hope I wasn’t completely out to lunch although that’s possible 😂 let me know if you have any follow ups or if you noticed something I got wrong
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  7. That’s not an argument against international diversification unless you believe that this info isn’t priced in.
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  8.  @gmk22799898  haha well thanks for the compliment although I’m not sure I’m worthy of it 😂 no not a professor , but i did study finance and econ at uni. I remember this first year or two only doing capm as well but the curriculum expanded after that. I recommend checking out Fama and Frenches website - it might explain it a little better. I can’t share the link here but if you Google Kenneth French data library you will find it. Ben’s channel is also an excellent source for covering all the major topics you will be studying btw. It’s also more fun!
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  9. He’s not recommending you buy individual stocks from international markets. Mungers Alibaba investment is irrelevant to the discussion
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  10. All of them
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  11.  @oleksacrowley9580  would you have preferred I responded to your rhetorical question? Your comment on total war against the west seems to erroneously suggest that America is not a part of the west. It also seems to assume that you can accurately predict not only returns but significant economic/political events based on geography. Even if we were to grant you that something like that is likely to occur you have to take it a step further and assume that the markets havnt priced this risk in. This channel doesn’t advocate for investment in themed etfs - there’s a whole video on it. If you were to invest in the broad total world market at market weights BABA would only come in as around the 44th biggest holding I believe - hardly significant enough to have a significant impact on your wealth on its own. Which is the point of global diversification. ‘Working against yourself , reinforcing your enemy’ - what in the world does that even mean?
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