Cross-country asset allocation maps different phases of economic cycles, letting a portfolio complement itself across national economic rhythms and cushion the shock of any single market’s cyclical swings.
Major asset allocation maps economic-cycle phases to different return profiles, while index investing reduces single-stock and single-bond risk and avoids the moral hazard of discretionary investment managers.
Through diversification across time and space, investors can enjoy the “only free lunch” in Buffett’s eyes, keeping the portfolio cycle-resilient, broadly diversified and steadily rising over the long term.