Dare to 'disagree' with Buffet and Bogle?

[anthony28]

@evietheturtle You need USD to buy them and when you sell them you get USD. Then you change it to EUR to buy your bread or caviar.

Anyone who can't understand that should away from investing into traded instruments.

 

[evietheturtle]

@anthony28 So? USD is just a temporary trading asset in that case...

Imagine you are buying an US ETF that does nothing else besides holding physical gold bars. Why would any currency matter at all? What if in 30 years when you want to sell it the EUR doesn't even exist anymore or something like that...

 

[anthony28]

@evietheturtle For your own benefit you should figure this out by yourself.

 

[evietheturtle]

@anthony28 I have... I'm asking you to explain it again to me, to make sure we properly understood the same thing

 

[anthony28]

@evietheturtle Nice trick - I will willingly fall for it as you seem to be honestly curious.

At some point you will want to buy something with your gains right? Maybe in 30 days or 30 years. Your gold will not be accepted at your čar dealership and you can not pay your bills or kids room at the college with USD if you live in EU.

You will need to convert what you call temporary asset to EUR and don't know what the rate will be at that point.

Your S&P 500 can be 10% up but if USD is 10% down in relation to the currency you need - then your gain is a nice fat 0 you can buy only a fart with

 

[evietheturtle]

@anthony28 But the value of the gold that I will trade to EUR to buy the car, will be completely indipendent of the USD that the ETF used.

1kg of Gold = X EUR always, no matter what the USD does. Or not?

 

[ldarlingt]

@anthony28 What I meant is that both SPPW and SXR8 have the same characteristics in regards to currency, so I should have the same currency risk in both. It's the same for VWCE.

 

[anthony28]

@ldarlingt I advise you to use JustEtf - there you can select the ETF quotes in the currency of your choice.

You will be surprised how much the historical quotes differ dependant on your destination currency ...

 

[evietheturtle]

@anthony28

You will be surprised how much the historical quotes differ dependant on your destination currency ...

They literally don't... If at any point you convert it to the destination currency at that time.

Otherwise show us an example.

 

[anthony28]

@ldarlingt No because a world ETF needs several currencies to buy underlaying stocks - EUR, USD, YEN ... This makes the currency risk a bit smaller as the swings cancel each other out (arguably still not fully due to balance of the etf).

With a single county etf you don't get that balancing between currencies.

 

[fockerjv]

@anthony28 You do not get it. If you buy a house, does it's value after you own it differ if you bought it in euro or usd? Same with parts from a company or a basket of companies.

 

[evietheturtle]

@ldarlingt The S&P500 is a good proxy for an All-World ETF because most companies in there operate globally anyway. But if you have access to other, cheap ETFs that cover the whole world I would go for them instead.

 

[boxer_dog]

@evietheturtle Same is true in reverse. There are fantastic companies in Europe that operate globally. Think ASML, LVHM, or recent success story - Novo Nordisk. Even though it's from small country of only 5mln people, Denmark, It is now most valuable company in Europe, with a market cap higher than Denmarks entire GDP. And most of it's profits comes from USA.

Investing in SP500 only you miss companies like these. I certainly want to own Novo Nordisk, and other great companies from around the world. The USA does not have a monopoly on capitalism.

 

[evietheturtle]

@boxer_dog I never said that it's better to get the S&P500. Just that if that is the only cheap ETF that you have access to, it does a decent job at roughly representing the World economy.

That's probably where those statements from Buffet and Bogle come from, because when they said it global index funds where not a common thing or they had high fees.

 

[boxer_dog]

@evietheturtle Yes, maybe that's why they said that. But people believe that they are some sort of prophets and now something that everyone else doesn't.

Nowadays it costs the same to either own world index or SP500.

 

[joshuasloth]

@evietheturtle VTI maybe is better

 

[kai81112]

@ldarlingt You should not take advice from a buzzfeed-like blog