International How the U.S. Stock Market is Unique

Discussion in 'Shares & Funds' started by Nodrog, 11th Jan, 2018.

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  1. Nodrog

    Nodrog Well-Known Member

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    How the U.S. Stock Market is Unique

    The U.S. and Japan are really the only two markets that aren’t dominated by a handful of companies. What’s striking about these statistics is not only that these countries have concentrated holdings but that those holdings are often in very few sectors.
    0875BDE5-0140-4F36-9F51-6F37148379D9.jpeg
     
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  2. oracle

    oracle Well-Known Member

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    Great piece of information @Nodrog

    What I would really like to see is same information 20 years ago for atleast US and Australia and see how the concentration has changed.

    The reason why beating the index is very hard for US market is due to their index being so diverse. Would love to know if ASX200 index is less, more or about the same level of concentration compared to 20 years ago.

    Cheers,
    Oracle.
     
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  3. Nodrog

    Nodrog Well-Known Member

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    What surprised me is how concentrated most countries are, not just Australia and Canada.
     
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  4. oracle

    oracle Well-Known Member

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    Agree.. I did a similar post sometime back. See here

    Cheers,
    Oracle.
     
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  5. oracle

    oracle Well-Known Member

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    @Nodrog the above table shows top 10 holding for ASX has a weighting of 54%.

    I had to verify this so went to Vanguard website and downloaded holdings for VAS ETF (ASX300).

    As of 30/11/2017 the top 10 holdings weighting is a 44% instead of the 54%. See screenshot below


    VAS_Top_10.PNG

    More details:
    Top 10: 44%
    Top 20: 56.86%
    Top 30: 65.74%
    Top 40: 71.96%
    Top 50: 77.39%

    Cheers,
    Oracle.
     
  6. The Falcon

    The Falcon Well-Known Member

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    Its more about market efficiency than concentration, even in concentrated markets like AU and UK, 10 year SPIVA shows 80%+ under performance for all cap managers.
     
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  7. willair

    willair Well-Known Member Premium Member

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    If you want a good read by author "Jim-Collins",on the study of 1,435 companies over a 45 year period,then he picks 11 companies that become great and how they still achieved greatness ,that went from normal average returns ,then exceeded the normal stock market by 3 over a 15 year period..

    Jim Collins - Books
     
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  8. ShireBoy

    ShireBoy Well-Known Member

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    The Vanguard fact sheet agrees:
    https://api.vanguard.com/rs/gre/gls/stable/documents/7639/au

    Unsure where the discrepancy comes from..
     
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  9. Nodrog

    Nodrog Well-Known Member

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    Either way it doesn’t really change the story much.

    An index fund covering US and Japan / Europe / UK / ... such as VGS or VTS and VEU gives great diversification thereby protecting one from the issues raised in the article. One could try to rotate from one country to the next using ETFs to chase performance but I prefer to own the lot. Much easier and likely to do better than the vast majority of actives over the longer term. Those who don’t mind a little more risk can throw in EM as well in the case of VGS. Pretty much everything covered on the equity side.