Foreign Baggage

For the last five or so years, I’ve held a disproportionately large position in the Vanguard World Stock Index ETF (VT). This fund has given me “coverage” of the global markets, including a 40% stake in international stocks. Originally, I congratulated myself on my cleverness. After all, VT is monstrously diversified and dirt cheap and, besides, foreign markets were deemed sorely undervalued by the market cognoscenti.

But were they really? As of now, my shrewd little maneuver has left my portfolio performing embarrassingly below the return of the “simpleminded” and home-biased—but inordinately domestic tech/heavy—S&P index funds.

I still hear the siren call: foreign stocks—and especially European markets are so-o-o-o precious. The thing about value investing is that you can be too early. Is that all this is, an opportunity as yet unrecognized by the masses? Or is our more capitalist and achievement-oriented society destined to support a premium valuation into the future? Right now, that’s my major investment dilemma.