Balancing US and International Stocks to Diversify Your Investments, Ep #263 cover art

Balancing US and International Stocks to Diversify Your Investments, Ep #263

Balancing US and International Stocks to Diversify Your Investments, Ep #263

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 Most investors have been ignoring international stocks lately because the US market has been performing so well—but that strategy might backfire this year, with international markets significantly outpacing American stocks. In this episode, I dive into why diversifying globally isn't just smart investing; it's essential for long-term wealth building. We explore how the US currently dominates 61% of world market capitalization, but history shows this wasn't always the case—and it won't necessarily continue. I share four key reasons international investing should be part of your portfolio: it reduces geographic risk when any one country hits turbulence, gives you access to high-growth emerging markets that have delivered spectacular returns, protects you through currency diversification, and helps overcome the natural tendency to only invest in familiar companies. The numbers tell a compelling story—while the S&P 500 is up around 12% this year, international developed markets are up nearly 30%, and some individual countries have delivered returns of 50-90% in recent years. Whether you're completely US-focused or wondering how much international exposure makes sense for your situation, this episode provides the data and reasoning you need to build a more resilient, globally diversified portfolio. I also touch on an interesting parallel between portfolio diversification and gut health—turns out both benefit from variety and balance. Outline of This Episode
  • [01:12] The importance of the gut microbiome for health.
  • [03:42] International markets surpass US performance right now.
  • [06:24] International diversification mitigates geographic risk.
  • [10:25] A globally diversified portfolio balances volatility and gives opportunity for growth.
  • [13:49] invest internationally to protect against domestic currency depreciation.
  • [15:13] Why to overcome a behavioral home country bias.
  • [17:06] Review your health and financial diversification.

Building a healthier, more resilient investment portfolio. Broadening your approach—whether it’s what you eat or where you invest—can improve your long-term outcomes. Did you know that we all have an ecosystem of microbes living within our intestines? Science increasingly shows that a highly diverse gut microbiome is linked to better health, well-being, and more healthy years well into old age. A thriving gut health requires at least 30 different types of plant-based foods each week. The greater the diversity, the more kinds of helpful bacteria can flourish, supporting everything from digestion to immunity. Just as variety improves gut health, diversity is equally essential in investing. Many Americans have opted to remove international stocks from their portfolios, citing the recent dominance of U.S. markets. I want to push back on this trend, with these important points:
  • The Shifting Sands of Market Dominance:

As of early 2024, U.S. markets make up approximately 61% of the world’s capitalization. The next-largest...
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