Oh man, if people are basing their investment strategies off of some BS I was randomly shouting at the internet last week, we know we're in trouble.
Scojo, most people here would recommend that your asset allocation be determined by your personal goals and risk tolerance. There are valid reasons to deviate from whole-world index exposure. Let me think of a few...
1. total portfolio size. If you already have a billion dollars, and have low expenses, you might consider more conservative fixed income investments because capital preservation is more important to you than growth.
2. outside assets, like a pension, that already provide the equivalent of fixed income investments and thus might suggest you should lever up the equity exposure in the rest of your portfolio.
3. home country bias, if you're trying to minimize currency risk or expense ratios.
4. tax shelter availability, if the benefits of the sheltering specific asset types outweigh the potential losses associated with an unbalanced portfolio.
5. time horizon or liquidity issues. If you expect to need the money in six months, the 30 year treasury market isn't relevant to you.
6. lofty goals. If you are young and ambitious and poor, you might accept crazy high risks for crazy high rewards because your wipeout risk is minimally dangerous to your long term plans.
7. insider information. People fled Pyongyang before the Korean War started because they could read the writing on the wall, and in some cases maybe you can too.
8. familiarity. I wouldn't invest in anything I didn't at least sort of understand, regardless of it's market cap.
9. the realization that market cap is totally bogus anyway. The value of all financial assets in the world is roughly equal to the value of all real estate in the world, but very few people take this to mean they should have 1/2 of their total investments in real estate. The total value of derivatives is WAY higher than the total value of all financial assets, but you'd be stupid to put all of your money in derivatives. You have to limit your definition of "whole world" to some subset of asset classes, and how you do that is kind of an open question.
Then there's the issue of whether or not indexing even makes sense. There's a whole sub-cult on this forum (see miles, hode) who believe that your investment choices should follow strategies that have done well in the past, that you can do better than an index in the future if you invest in ways that have done better than an index in the past. This is purely a philosophical leap of faith, but it's a pretty common one. And only time will tell.