Early on he notes the following;
Why did advocates of a core investment approach endure such pain over the past decade? Investor experience could have been substantially improved with a greater focus on three key tenets of a core investment program: realistic return expectations, sustainable asset allocations and appropriate levels of diversification.
Occasionally the stock market has a bad decade and I am not sure that realistic return expectations are going to be a big part of the solution in a large decline where diversification as most people think of it seems to not be working. Obviously I am going to say that there needs to be a willingness to be on the look out for times when the risks of a large decline are elevated (like a breach of the 200 DMA) and heed those warnings by reducing net long exposure one way or another.
Successful core investment programs set asset allocations to match long-term return objectives with projected growth in liabilities. To best capture the asset class risk premium implied in the strategic asset allocation, investors need to maintain asset class exposures over long-term horizons.
Fleites is talking 30 years. A while back I linked to an article by Niels Jensen from Absolute Return Partners that spelled out an argument that we only have 20 years to save based on when we start making a lot of money (relative to our own earnings), when children are likely grown and a couple of other factors and while I'm not sure I agree entirely with Jensen, for some folks their accumulation phase may not be very long if they hope to retire at a "normal" age.
The other point I would add to the article is about investing in foreign markets but doing so selectively. "Selectively" means avoiding broad foreign indexes and going to the country level. In talking in the article about all that went wrong during the last decade I was reminded of how many foreign markets had very good decades. Not to say they did not correct down when the US market went down a lot but it should be obvious that people who were self aware enough shed their home bias and had modest exposures to countries that went up 100-300% in the decade while the SPX was dropping 24% on a price basis probably fared pretty well.
Going forward, the fundamental, long term investment case for many other countries is simply better than that of the US. If you agree then you probably need more foreign exposure.