Emma Wall: You spoke a little bit about asset allocation, 65:35 or 60:40. What about geographical allocation?
John C. Bogle: Well, I do not believe that you have to have geographical – if you're a U.S. – our business is focused on the U.S., although we have a huge international operation now. But for the U.S. investor, I do not think it is essential to own outside of the U.S. and I say that for a couple of reasons. Everybody tells me I'm wrong, so I will leave it to you in the audience to decide whether I'm wrong or not.
But I've been saying this for 22 years, even in my first book and so far I've been right which makes me kind of a devil to deal with. But I look at it, I could give you a lot of numbers, but let me just say a couple of things. One, in the U.S., you own an international portfolio, 50% of the revenues, 50% of the earnings of U.S. companies come from outside the U.S. So, it's not as if you're in Fortress America or in a Monroe Doctrine kind of an arrangement. So, that's number one. You are international already.
Number two, I look at the international index, FTSE Index and the first three countries I see – look at the index. Don't just look at the index in total, look at what's in there, what you're investing in. And the largest three countries constituting 40% of the international or non-U.S. index are the U.K., Japan, and France. I just can't conceive that that combination of countries is going to be more productive, more innovative, more flexible, has better financial institutions, better institutional strength than the United States. You can argue. I'm jingoist. Take that into account because I'm not always right. And the fact that I've been right in the past on this may well mean I'll be wrong in the future. So, you have to decide for yourself.
But I do want you all to think about the reality from a U.S. standpoint of being international or being beyond the U.S. in a very material way, 50%, in both cases, in revenues and earnings, and also think about individual countries that are going to dominate and are dominating the world index. And I won't say too much about those three countries. But you can go through the list of the problems they are facing. And I won't waste your time because you know just as well as I do.
So, I don't think you need to. And as I've said here from the very beginning, if a U.S. investor believes that he or she needs international, limit it to 20% and international in very rough terms, 40% of the market, I don't think you need to go that far. And by the way in candor, Vanguard thinks I'm totally wrong, the firm I created, the present management thinks I'm totally wrong and they may be right. I don't want to argue about right and wrong here. I'm going to give you the best opinion I can and be a straight shooter with you.
