In actuality, most asset allocation programs have zero intl. bonds, a 5-10% weighting of intl. stocks, and a huge exposure to large cap domestics
that is the kind of portfolio Bogle seems to like. indexed and passive portfolios will naturally favor large caps (and overvalued Ponzi sectors) due to their market weightings. once you take the leap of faith that The Market Knows Best, what else can you do?
it seems to me that a true indexing approach would be global in nature and based on purchasing power parity. but by historical accident, the rise of indexing/closet-indexing (and asset allocation) coincided with the ascendance of US equity/bond markets and a US financial/geopolitical hegemony, and also with a terrible market for commodities.
this has led to bias against foreign stocks, value stocks, and real goods in favor of tech, US, growth, and "paper goods" (financials and fiat currency).
the irony is that things like international activity/production, which constitutes like 90% of the global total, is treated as an exotic spice which should not exceed 5-10%, just like gold or small value. it never seems to occur to these folks that they are in fact heavily overweight a very narrow group of asset classes, all of which are at the sputtering end of multidecade bull markets. |
