The Little Book

Your book clearly demonstrates the superiority of low expense funds. I understand why you are recommending owning equity holdings in an all-US stock market index portfolio. It is less clear to me why you ar recommending holding bonds in an all-US bond market index portfolio. In combinations of equity and bond portfolios where the stock amount is large enough to dominate overall portfolio declines a long-term bond index fund will produce a greater return than an all-market fund index fund. It is only when bond declnes dominate the portfolio declines, say at bond amounts of 70% or higher, that an all-market bond fund might be a better recommedation. In other words, considering both risk and return a portfolio of 50% in a total stock market fund and 50% in a long-term bond index fund is better than a portfolio of 50% in a total stock market index fund and 50% in a total bond market fund.