In looking at the stock component of a long term portfolio what do you think are some good percentage ratios to allocate to Australian and international stocks (using funds as a vehicle)?

You can read many investment books written by Americans that advocate devoting figures like 80/20 or 70/30 of one's portfolio to U.S/non-U.S. stock.

But how do such recommendations translate for Australian investors? The market sizes are incomparable. Our much smaller market would seem to suggest Australian investors need a higher percentage of foreign stocks than these American recommendations, figures like 60/40, 50/50, or 40/60. One could even argue 20/80 or 10/90.

I'm speaking about these allocations not as a means to pick markets but as a way to diversify and reduce risk. You never know what could happen. I mean if you were Japanese and investing in 1989 you'd feel pretty happy investing 100% in your own country, but of course an allocation of 50/50 would have reduced a lot of the pain that was to come.

Australia has a bright economic outlook at present but without an overseas component in your portfolio it's a big bet on a very small market, right?

So if you agree that some foreign component is required then what do you suggest that figure should be?