VOO is diversified across hundreds of large U.S. companies, but it is still one market segment. The period from 2000 through 2007 illustrates the risk: an investor in an S&P 500 proxy could finish with a modest nominal gain and a loss after inflation even before the 2008 financial crisis.
What the historical example means
The source article used historical proxy data because VOO did not yet exist. It reported that $100,000 in the U.S. large-cap proxy grew to about $113,187 by the end of 2007, but its inflation-adjusted value was roughly $90,696. International stocks and bonds produced stronger results in that specific window.
Those numbers describe one chosen period and one backtest. They do not prove that international stocks or bonds will outperform in the next downturn. Their value is in showing that a broadly diversified U.S. equity fund can still suffer a long period of weak purchasing-power returns.
Why concentration can persist
VOO tracks a market-value-weighted index. When a small group of large companies dominates the market, the fund becomes more dependent on their profits and valuations. That structure can work extremely well during a leadership cycle, but it also means that owning many securities does not eliminate common exposure to the same economic forces.
Bonds and international stocks respond to different drivers, including interest rates, currencies and regional business cycles. They can therefore reduce reliance on U.S. mega-cap earnings, although neither asset class is guaranteed to rise when U.S. stocks fall.
The investor problem is behavioral
Diversification often looks unnecessary while one market leads. Adding another asset only after it outperforms can turn diversification into performance chasing. A better process sets target weights in advance, rebalances on a schedule or around clear thresholds and keeps enough liquidity to avoid selling equities during a decline.
BTI's conclusion is not that VOO is unsuitable. It is that one excellent fund cannot cover every market regime. Investors who depend on the portfolio for withdrawals should test whether their plan can survive several years of weak real returns. The most useful diversifier is one chosen before the next cycle begins and held when it temporarily disappoints.