Global Diversification Protects Against Lost Decades
US vs. international vs. global portfolio across different decades
The US has dominated since 2010, but international stocks outperformed significantly in the 2000s. Japan's 'lost decades' since 1989 demonstrate that concentration in a single market carries real risk — even for the world's second-largest economy.
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
The S&P 500 returned approximately 0% (real) in the 2000s while EAFE returned +30% real. The US dominance of 2010-2024 could reverse — it has before.
The Nikkei 225 peaked in December 1989 and didn't recover until 2024 — 35 years later. This can happen to any single-country allocation, including the US.
A 70/30 US/international split has historically matched pure US returns with 10-15% lower volatility and significantly shorter max drawdown recovery times.
Hold a meaningful international allocation before the case for it becomes obvious — Japan's experience shows a single market, however dominant, can stagnate for decades, and diversification pays precisely when faith in the home market peaks.