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Gerben's avatar

Interesting read. However, a buy-and-hold 30 years strategy is not per se the typical case (before pension). A more realistic scenario would be to "buy every month for 30 years" and evaluate the CAGR at the end of the period. This will move the expected reward more closely to the mean, as one basically takes 360 samples from the presented distribution (though every next draw has a 1 month shorter duration).

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Fringe Finance's avatar

Great article. What makes international diversification so much more difficult, though, other than identifying investment opportunities, are the randomly appearing U.S. sanctions. Many of the BRICS+ countries and are either off-limits for U.S. investors, have in recent years become off-limits (such as China Mobile and Russian companies), or are in danger of becoming off-limits soon (Hong Kong is rumored to be sanctioned, which would affect the stock market for most foreign investors in China). India, for now, is still okay, but for how much longer? Even NATO countries, like Turkey, are not safe. I am not trying to dissuade anyone from investing in those countries where U.S. investors are still allowed to invest, but one needs to have a Plan B. Michael Burry, who made a fortune predicting the 2007 subprime crisis, recently significantly increased his Chinese investments, but he also bought puts. He didn't say it, but I suspect it was as a hedge against randomly appearing U.S. sanctions.

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