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Motley Fool Global Gains / GGM: Really Basic Questions


Subject:  Re: Why shpould I renew my subscription to the G Date:  4/15/2012  8:30 PM
Author:  TMFDoraemon Number:  836 of 847

The question still remains as to why a US investor not just dollar average into SPY or DJI.


An investor should probably dollar cost average into those vehicles or into US stocks that are within those vehicles. That's a separate decision from whether or not to invest globally.

Once you make the decision to invest globally you're largely (there are exceptions like Coke) talking about investing in companies not in the S&P, so you should measure the performance against an index of like companies.

Right now it's obvious that looking at the last 4-5 years you'd say why invest internationally when you could buy the S&P and perform better? Had we looked at data from 1998 to 2008 we would see the EFA blowing away the SPY and the question would be reversed. Why invest in the S&P when you can just invest internationally?

That's the rub, only investors don't know whether the SPY or EFA will outperform over the next five years from today.

I am still into GG for those esoteric ideas that no other service dares to explore.

Which ideas are these? I don't mind the occasional esoteric idea, but I don't have a ton of interest in them.

I would appreciate dedicated coverage on foreign focused etfs.

The right way to provide coverage of these vehicles is to dig into the top 10 - 25 holdings in each and cover them, then roll up the coverage based on their weightings in the index. That can be done, but I think it's more work than you realize and would be expensive to do -- unless the customer is also paying for the coverage of the underlying companies in the index, then rolling it up could be a throw in.

What you're really paying for there is opinions on 10-25 companies per country and the coverage of the etf is just an average of those opinions. Beyond 4 etfs you're talking about a more resource intensive endeavor than GG (assuming regular updates for earnings and trans-formative events)

The other issue is that some of these vehicles aren't really great investments, because their overweight in one or two sectors and those aren't necessarily the sectors that are the fastest growing or most attractively valued -- and that's leaving aside the question of whether an investor wants or needs exposure to them.

Just some thoughts to keep in mind as you look at country etfs.


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