The US stock market is not the only thing that has been humming along in the US.
The economy has too.
Apart from the first quarter, last year’s GDP numbers were quite good.
It has been hard to argue with investing in the US markets for many years now, but last year we also saw European and other International markets perform even better than the US.
You may be all for America First, but investing America Only can have its risks. This should wake investors up to why diversification matters in a portfolio.
Of course, diversification is not just about other countries, but about other sectors within America beyond the biggest companies, and other asset classes.
One of the best charts on this comes from JPMorgan Chase and demonstrates why holding investments across many asset classes can keep you sane amid volatility.
One can see how if you invested only in REITS (real estate investment trusts), five out of the last fifteen years it led in overall return, but in three of them—including last year—it was the very worst performer. You can also see how in 2025 stock markets outside the US were the top-performing asset classes.
The key thing to notice is on the the left of that chart. Investing in a range of asset classes can give investors the best of both worlds—solid investment returns (7.3%) without wild volatility (10.1%).
In this new year, you may consider revisiting what you own.
- Where might you have too much of your money invested?
- Where might you have not enough of your money invested?
You can be too diversified, though. Many investment professionals have discussed the problems of over-diversification and pointed to the benefits of concentrating in particular companies.
No doubt big positions in the best companies can work wonderfully…until it doesn’t.
One thing about having a diversified portfolio is to keep you humble and solvent. It can keep you humming along your investment journey through the certain hiccups you’ll experience along the way.