Why Diversification Remains a Cornerstone of Our Investment Strategy
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Last week, U.S. markets were a wild ride.
The S&P 500 dropped about 2.2%, the Nasdaq fell 3.1%, and the Dow shed 1.7%, with tariffs and trade tensions driving volatility. Tech stocks, especially chipmakers, took a hit after new export restrictions, while consumer confidence waned. Despite a late rebound, it was a rough week for U.S. equities.
In contrast, a globally diversified portfolio – the kind you have with us – which is built on Modern Portfolio Theory (MPT), held up much better. By spreading investments across U.S. and international stocks, bonds, Large, Small, Emerging Markets, losses were cushioned.
For example, while U.S. stocks slumped, bonds and gold stayed steady, and some international markets like Hong Kong’s Hang Seng even posted gains earlier this quarter.
I appreciate your trust in this Investment Philosophy, over the long run it will pay off for disciplined investors. MPT shows that mixing assets that don’t move in sync reduces risk, and last week it proved it — diversified portfolios lost far less, some even staying flat or slightly up. Don’t worry, your diversified strategy is designed to weather these storms, keeping your investments steadier for the long haul.
Here’s the chart and that shows the difference between the US market and International. You own both whereas many investors are 60%-90% in US only. Congratulations!
Thanks for reading!
