Morningstar - Fall 2019 - 13

resembles the rest of the world stock market, only
with somewhat greater volatility.
For U.S. investors, the existing asset-allocation
framework contains three geographic tiers:
1) domestic, 2) foreign developed markets, and 3)
emerging markets. I do not propose, today,
to dismantle the current scheme. That would
be a step too far. Rather, I suggest modifying it, by
folding the third group into the second. Two
asset buckets for equities is plenty. No need to
complicate one's investment life by using
a third slot, which likely will occupy only a sliver
of the portfolio.

From Paris to
Chippewa Falls
Finding a dusty Cray-2
supercomputer in
a museum triggers an
investing memory.
THE OLD SQUIRREL

Over time, though, the entire scheme should be
overhauled. What matters in today's globally
connected marketplace is not where corporations
are headquartered. While every country's ruling
political party claims to control the economic
winds-at least, as long as those breezes
blow favorably-they are almost completely
unable to do so. More significant is where
corporations conduct their businesses and how
they are affected by currency movements.
(See "A Globalized World" on Page 47.)
Ultimately, I believe, asset-allocation models
will emphasize those attributes. They will create
equity portfolios of companies that have
geographically diverse revenue streams, with the
aggregate currency exposures noted, and adjusted
as necessary. Just as now, some investors
will favor growth-oriented strategies, while others
will prefer value stocks. The latter will likely
hold more emerging-markets stocks than the
former-but as a corollary of their assetallocation choices, not as the direct effect. K
John Rekenthaler is vice president of research
with Morningstar Research Services.

Ralph Wanger

The views expressed here are those of the
author and do not necessarily reflect the views
of Morningstar.
I am at the stage in life that when something
happens, it sets off a chain of memories connecting
today with something that happened in the
distant past.
On April 4, we were in Paris and took the Métro
to the Arts et Métiers station. I was within
a few feet of the top of the subway stairs when
I realized that my wallet had disappeared. This
is a known risk facing unwary tourists, but it
happened. The first feeling you have is one of anger,
mostly at yourself for not being more careful.
And second, you realize that getting new credit
cards, drivers license, and so forth could be
a substantial effort for me and my assistant back
in Chicago. Luckily, she is organized and had
copies of all my papers on file, so she cut off the
credit cards and applied for a new drivers
license with practiced ease. Even the French
authorities took my plight in stride. A few days later,
I got a letter from the Musée du Service des
Objets Trouvés informing me that they had found
the wallet with all the documents intact
(obviously not the cash), and my wallet was
returned to me a month later.

Paris has a great many museums of all size and
description, ranging from the intimidating
mass of the Louvre, down to single townhouses
such as the Musée Marmottan Monet. There
are elegant and luxurious mansions from the 1880s,
such as the Musée Nissim de Camondo (best
furniture) and the Musée Jacquemart-André
(best pastries). The small museums are generally
uncrowded, especially compared with the
tourist "must-sees" such as the Musée d'Orsay.
And, as a French museum should, most of
them have excellent cafes. I wanted to see the
Musée des Arts et Métiers because I am
active at the Museum of Science and Industry in
Chicago, and the French industrial design
museum was an interesting comparison.
The exhibits in Paris were of great scientific and
historical significance, but the Chicago
museum is much more interactive and offers
more entertainment.
The Cray-2
The Musée des Arts et Métiers began its computer
exhibit with some of the original Jacquard looms.
They used punch cards to weave complex
patterns for textile mills. These amazing machines
dated from 1804. In the next hall, there was
a modern American computer shaped like a large
cylinder that I instantly recognized as a Cray
design. In fact, it was a Cray-2. In 1985, the Cray-2
was the fastest supercomputer on the market.
It was now a dusty museum exhibit of no economic
value. My mind flipped back exactly 40 years
when I wrote the Acorn Fund quarterly report on
May 1, 1979. The scene shifted, however,
from Paris to a small town in the Upper Midwest.

Woody Allen's best movie was Annie Hall.1 It is 99%
a New York City movie, but Allen needed
a hometown for Annie. He picked Chippewa Falls,
Wisc., because he liked the name; he didn't
actually go there. But I did in 1978, as I wrote in
my quarterly report:
Cray to the Rescue
When Woody Allen needed a name for a typical
Midwestern small town for Annie Hall to

1 Annie Hall contains more intellectual wit and cultural references than any other movie ever to win the Oscar for Best Picture, and in winning the award in 1978, it edged out Star Wars, an
outcome unthinkable today.

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Morningstar - Fall 2019

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