Part 8/11:
Critics of the paper point out potential flaws, arguing that long-dated historical data may not reflect contemporary market conditions. The authors countered this by adjusting the sample data to account for periods after World War II, focusing on economically developed nations, and even excluding data from the US market entirely.
Despite these restrictions, the optimal portfolio allocation remained largely unchanged, thus providing compelling evidence for the resilience of an equity-based strategy. Interestingly, when the authors did consider the potential impacts of U.S. stock market returns, it was shown that heavy reliance on domestic exposure could diminish optimal portfolio efficiency.