This is a topic of constant controversy in this forum, and for one of the more recent go-arounds see the thread containing my posting
here. It's controversial because John C. Bogle himself believes international investing is not
necessary, and says if you want to do it anyway, OK, but don't go over 20% of your stock allocation. Within the forum, that is a minority view and one area in which many Bogleheads are willing to say, simply, "I think Bogle is wrong."
Sandip Bhagat, who is some fairly high-ranking person at Vanguard, has written a Vanguard Research and Commentary article entitled Global investing trap: Multinational not the same as international
which lays out the case for multinational domestic companies not being equivalent to international investing.
For allocation of stocks to international, Vanguard officially recommends a wide range in which the minimum is 20%, and the maximum is full global cap-weighted (which is about 55-60% international). In the forum, there are a number of posters arguing very strongly for full global cap-weighting, which can be conveniently obtained in a single Vanguard fund, the Vanguard Total World Stock Index Fund.
Despite all that, and despite an obvious trend for ever-increasing international allocation recommendations, correlations between U.S. and international stocks are
high, and have probably been increasing, possibly because
of globalization and big corporations being increasingly multinational.
The interesting thing about all this is that despite strong opinions, usually expressed with high degrees of confidence, the actual data is sufficiently ambiguous and weak that it can be and is argued indefinitely. Over the past decade, international has helped portfolios, but that is mostly because of currency factors--the dollar weakening a lot over 2002-2008--not because of diversification in the behavior of national stock markets as such.
Regardless of whether the S&P 500 is globalized, these days the idea of holding no international at all is definitely out of the mainstream of investment thinking.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.