I’m taking a break from my paternity leave (mom, baby, and family are doing great!) to bring you this breaking news post!

I’ve been getting a LOT of questions about what to do about the gloom and doom we are hearing in the news. Should you change something to avoid the inevitable upcoming crash? My answer, as always, is this: don’t change anything. Stay the course. Keep investing early and often. Whatever you think of the current administration and the headlines, in 20 years they’ll all be relegated to a history book. At that time, you’ll be glad you had 20 years in the market and didn’t make panicky moves jumping in and out trying to time market crashes. That type of behavior is speculative gambling and much more likely to hurt you than help you.

That said, the markets this year are telling an important story. One I’ve been warning about for years. The US stock market will not always outperform the non-US market. Since President Trump’s second inauguration, the International market has outperformed the US market by about 6.7%. That’s a lot for roughly a month and a half. If you are 100% invested in US-based companies, your portfolio is several crucial percentage points behind where a more diversified portfolio would be this year.

I KNOW WHAT YOU’RE THINKING. “Yeah, but the US has gone up a LOT more than international markets over the last 15 years”. Yes, that’s true. But knowing what happened looking backward is of little value. We want to know what’s going to happen going FORWARD. Will the next 15 years be like the last 15? Nope. What will they be like? No idea. But there is a convincing argument that US stocks, especially huge tech stocks are way overvalued. As the late great Jack Bogle said, “It’s very difficult for any particular segment of the stock market to sustain superior performance. The watch word for our financial markets is, “reversion to the mean”.

What does he mean? Those white hot huge US tech stocks may have to pay the piper for all that outperformance. And undervalued international stocks may be due for catching up. That’s why I’m maintaining a globally diversified portfolio.

Remember the two rules!

-Jeremy