• The percentage of US stocks vs non-US stocks in your portfolio will, over long periods, impact your returns – but not as much as the percentage of stocks vs. bonds. Figure out the appropriate stock/bond mix first. Bonds are your cushion – a store of value in times like today.
• Over the last 20 years, US stocks have far outpaced non-US stocks. $1 invested in 2005 would be worth about $6.80 if you had bought the US stock market, and only $2.80 if you had bought the non-US stock market. (That’s through March 31, 2025.)
• At the start of 2025, the value of the US stock market was about 65% of the world stock market value. That compared to about 35% in 1990, as illustrated by the chart above, provided by our friends at Dimensional Fund Advisors. In other words, if you wanted to own a mix of stocks that represents what’s available globally, you would own 65% in the US.
• Investors assign far higher valuations to US stocks. By most measures, US stocks are valued at twice the level of non-US stocks, when we compare the price to earnings or book value. Part of the reason is surely the dominance of tech companies in the US stock market. Tech companies usually attract much higher valuations. By contrast, non-US stock markets are dominated by financial and industrial companies.
• The argument that you can invest globally by buying large US companies may not achieve your goal. Yes, you own companies with non-US revenue. But it’s very different from owning non-US stocks. The data indicates that US stocks trade like US stocks, whether they have large non-US operations or are purely domestic. If you’re interested, we can send you an interesting research article on this.

There is no “right” answer for how much non-US stock to own. Having almost nothing invested outside the US worked well for the last two decades. But cycles don’t last forever. Diversify – not because of what’s happened this past quarter, but because it’s almost always the right long-term strategy.