Quill,
Everyone will have his or her own methods of investing and trading. That’s because each of us brings to the task our own unique means, needs, and goals (And our own ways of making mistakes. LOL) For me, diversifcation is a useful tool that does two things. It creates opportunities that might have otherwise been overlooked. It can be become a means to manage risk.
Create a line chart for EWT and overlay a line chart for TSM, thusly.
They track closely enough to be the same bet, with TSM being the admittedly better one. Now consider the reason why. TSM makes up 22% of EWT’s holdings. To buy ETW is make a bet on TSM, not a bet on the broad national economy of Taiwan. Thus, the other 78% of EWT’s holdings are mostly irrelevant to what EWT does or doesn’t do by way of making or losing money, because those holdings individually are such a small fraction of the total compared with TSM
Again, if you want to buy both ETFs, do so. But EWT gets struck off my list of country funds, because it isn’t a country fund, It’s just a closet bet on a specific tech company. The fund that tracks Brazil suffers from the same problem, as does SPY these days.
Why do I worry about this? When the US econmony crashes --and it will soon-- and the US market crashes, I’ve got two choices: sell short, or look to places and assets that aren’t highly correlated to the US. I’d prefer to do the latter if I can.
But don’t believe me that a crash is coming. Your buddy, Ray, predicts one. https://www.youtube.com/watch?v=3QOdI1qZ5D8
Charlie