I disagree with the opinion comment. They published several papers in top refereed journals.These academic findings are more opinions than facts and looking at past data doesn’t tell you a whole lot. You can only assess what the future (1, 5, 10 years from now) might look like and place your bets accordingly.
This is a main issue in this discussion. Is 30 or 60 years enough data? Combined with how relevant is data from further back?
Cederburg and Anakulova in their various published academic papers contend it is not. https://papers.ssrn.com/sol3/papers.cfm ... id=4590406 Using a much more extensive data set, they find international equities is a better diversifier of U.S. equities than bonds. More or less, they find long lasting mutli-decade periods of U.S. outperformance and underperformance (similar to what Nathan notes). They conclude that a very high international equity allocation might be optimal with zero bond for a given level of risk. Of course, if you have a large allocation to QQQ (as some have), your given level of risk is higher and you might be rewarded for such risk.
Anyways, the relevance of this work to this discussion might be that the percentage international allocation that is optimal for a given level of risk might be higher for an all equity portfolio.
I fully agree that it does not tell you a whole lot about the next decade. Past data is in the past.
Statistics: Posted by steve r — Fri Jan 03, 2025 2:56 pm