Mister_ultra (@Mister_ultra) on getquin

Are we overestimating our USA share? Why we all have a massive overweight in Germany and Europe respectively

An exciting discussion with @Epi has moved me to this contribution and I am curious how other opinions look like. [https://app.getquin.com/activity/MEZjmgeoSR?comment=581219&parent=580704]

We all know the discussion whether the US share in the MSCI World with over 60% is not too high. Shouldn't one therefore weight Europe, the emerging markets or Japan higher and thus reduce the US share?

I would like to mention an argument here, which in my eyes is rarely taken into account and which speaks against a shift to Europe.

First of all, however, I would like to put forward the classic arguments for the US overweighting, which I also subscribe to:

The large US corporations are active worldwide and generate their revenues globally.
About 40% of the earnings of the S&P 500 are generated abroad, in the tech sector it is even almost 60%.
Thus, even with an S&P 500 you have already achieved a significant diversification across countries and with a NASDAQ even stronger
Source: https://www.globalxetfs.com/sector-views-sp-500-sensitivity-to-global-factors/
This is certainly a rather subjective assessment, but in my eyes the best companies in the world come from the U.S. and are therefore often market leaders with corresponding budgets for research & development
Strong shareholder value thinking in the USA, which is also reflected in dividends and share buybacks

However, another decisive argument is our (significant) overweighting in Germany and thus indirectly Europe:

Our cash flow (salary) is completely dependent on the development in Germany. How do collective wage agreements develop? How do tax laws develop? Is Germany an attractive location and does it create jobs that are future-proof?
The median salary in Germany is currently ~45,000€, the average salary is ~53,000€.
Assuming a working life of 40 years, this represents an expected cash flow of ~€2 million
Even after our working lives, we continue to depend on Germany, namely through our pensions. If we leave the demographic development aside, the pension development is mainly based on the economic development in Germany (general salary development as a basis for pension increases).
The average pension in Germany is 1.543€, so about 18.500€ per year - Sad, but that's another discussion
The average pension drawdown time is between 15-25 years, depending on gender. I assume as an average 20 years
Here, too, there would then be a claim in the amount of ~370,000€.
The owner-occupied real estate is located on German soil. Here again we are dependent on the developments in Germany (taxes, appreciation,...)
Let's assume an average price per square meter of 2.700€ with an average size of 150 square meters.
Thus, the average value of a single-family home in the inventory is ~400,000€.

-> In sum we are here thus fast with a sum of ~3 million €which are directly or indirectly dependent on Germany / Europe.

-> This calculation is largely based on the average values in Germany. Since I assume that many members here earn significantly above the average, the corresponding values are also higher.

-> Of course, all this is only considered on a little detailed level and further factors like inflation, taxes or personal developments (e.g. disability, part-time,...) are not taken into account.

3-5 million Euros depending on Germany vs. a US overweighting?

Let's now take my portfolio of ~€200,000 as an example, of which ~75% is invested in the US.

In relation to the 3-5 million euros, this would correspond to only a US share of ~3-5%.

With a deposit in the amount of 1 million Euro, the share would then also be only 15-20%.

Taking into account the MSCI World, which has only 60% invested in the USA instead of my 75%, and additionally my hint from the beginning that the US corporations generate approx. 40% of their sales outside the USA, the US exposure would decrease even further.

How do you see this argumentation? Do you consider such thoughts for your investment decision or do you look at your investment completely isolated?

#aktie
#stocks
#usa
#etfs
#vermögen
#portfolio
#strategie

CVS Health@DividendenWaschbaer

7Mon

Very interesting point of view. The difference is, of course, that the salary is not available in total, but is paid in regularly, similar to a savings plan. The size of the portfolio is absolute and therefore the US share is automatically higher. Furthermore, although many US companies have their sales abroad, they are still dependent on American politics (and of course also on foreign governments).

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Moritz@leveragegrinding

@ccf

MarsEquities@CircusClown

For a consideration in the present you would have to discount the pension and salary sum to the present value or leave the salary and pension value and extrapolate your portfolio to 20-40 years.

six@six

That's why I also take a critical view of company shares: if you're dependent on the company you work for for your salary, and if you also have company shares, you're also dependent on the company for your savings.

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Capt‘n@Wuestenschiff

Absolutely my approach as well. I have 75% USA in my portfolio. My real estate (three times the value of the portfolio) is in Germany. It is almost impossible to overweight the US share.

Homer@Simpson

Thanks Mister 💪😊That's why I don't invest in $DHL 😂 currently the 🇺🇸 share is about 70% and will be increased further 😊👍

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DonkeyInvestor@DonkeyInvestor

Finally someone writes it down. I agree with you exactly. Comes in the #gqevergreens

Tim@Stratege_Tim

I am critical of the argumentation. The deliberate overweighting of one country, the U.S., has bubble-like features. For me, the following applies: I orient myself on the GDP of each country/continent/region in order to put their economic power in proportion to the global economy and thus to my portfolio. For me, the USA share of the savings plan is 35%. That is enough for the purpose that my own world ETF should fulfill (long-term retirement and pension protection and possibly early career exit). For the goal of medium-term asset accumulation (house building, asset accumulation in general) I see it differently. For me, an S&P500 ETF would be the first choice due to its incorruptible performance.

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@Mister_ultra
By the way, my USA share is only 30% of the portfolio. The share of China is based on 27.5% portfolio share of all emerging markets and with a China share of about 27.74% in the ETF overall, so about 7.63% share of the portfolio. I have no MSCI China ETF, because I hold shares for all emerging markets in one ETF. Only India I already have as an add-on/addition for the emerging markets ETF. Splitting out at least the top 10 emerging markets as a Zustaz to optimize the weighting in the ETF would be conceivable. Unfortunately, the range of ETFs on the market for individual countries does not give it, so I think it is within the scope.

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