We believe that the starting point for evaluating the allocation weight to be given US equities within the overall equity allocation in a portfolio should begin from the world weight of US equities.

It may well be that US equities should be overweighted or underweighted for any number of reasons, but we believe the world weight is the appropriate starting point.  It’s a bit like “zero based budgeting”.

We believe it is inappropriate to begin with old rules of thumb such as “80% to 90% US and up to 10% to 20% in foreign equities”.  At best, such rules were formed a long time ago, before the extensive globalization of commerce we have today. At worst, they were just narrow insular thinking.   You can arrive at an 80% US allocation, but you should not start at an 80% US allocation.

Currency Issues:

We are not overly concerned about the currency risk argument often posed