Global Diversification
One principle of Evidence-Based Investing is global diversification.
Diversification means you don't have all your eggs in one basket. In practice, that means owning thousands of stocks — usually through mutual funds or ETFs — instead of a handful of individual names. Global diversification simply means owning stocks from companies around the world, not just the United States.
A Quick History Lesson: Leadership Rotates
Market leadership between US and international stocks has swung back and forth for decades, and it rarely reverses on a predictable schedule:
1970s: International stocks outperformed US stocks.
Mid-to-late 1980s: International outperformed again, driven largely by Japan's economic boom.
2000–2009 (the "lost decade" for US stocks): International developed and emerging markets outperformed the S&P 500 by a wide margin, fueled in part by the dot-com crash, the Global Financial Crisis, and China's growth.
2010–2024: US stocks dominated, compounding at a much faster rate than international markets — largely on the back of Big Tech.
2025: International stocks reversed course sharply, outperforming the S&P 500 by roughly 14–16 percentage points.
The pattern isn't that international "always" or "eventually" outperforms — it's that nobody can reliably predict when leadership will shift. That unpredictability is exactly why global diversification is a risk-management strategy, not a market-timing bet.
How Much International Should I Own?
If you're on board with global diversification, the next question is how much of your portfolio should be international. A reasonable starting point is looking at how the total global stock market is actually divided up.
As of mid-2026, the MSCI ACWI Index — a broad benchmark covering both developed and emerging markets — breaks down roughly like this:
United States: ~64%
International developed markets (Japan, UK, Canada, Western Europe, etc.): ~24%
Emerging markets (China, India, Taiwan, South Korea, etc.): ~12%
(Source: MSCI ACWI Index Factsheet, data as of June 30, 2026.)
One More Reason This Isn't Just About Returns
Even setting aside performance, there's a concentration argument for international exposure. Going into 2026, the 10 largest companies in the S&P 500 made up close to 38% of the index.
In other words, a "US-only" portfolio today is a much more concentrated bet on a small handful of large tech companies than it was ten years ago. International exposure isn't just a bet on different countries — it's a way to avoid having your entire portfolio ride on the fortunes of a few mega-cap names.
Ready to put this into practice? If you're an ER physician or high-income professional looking for straightforward, evidence-based financial guidance, we'd love to connect. Schedule a free intro call with Yahara Wealth Management — no pressure, no sales pitch, just a conversation.
Past performance is not indicative of future results. The market index performance figures cited above are provided for illustrative and educational purposes only, are not indicative of any specific investment, and do not reflect fees, expenses, or taxes. All investments involve risk, including the possible loss of principal. This content is intended for general educational purposes and is not personalized investment advice; individual allocation decisions should take into account your specific financial situation, goals, and risk tolerance.