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3/9/2026, 6:39:02 AM ET
 
A Second Chance to Diversify?
 
Fund managers don’t think about investing the way the rest of us do.

If they pick a stock or a market that does better than whatever benchmark they’re tracking, professional kudos are likely to follow. It doesn’t matter if it’s because what they bought fell by less than the alternative.

Savers can’t pay the bills with relative returns. Even so, it’s comforting to own the investing world’s least-dirty shirt at a time like this. Americans who stayed close to home, or foreigners with outsize allocations to big U.S. stocks, are getting off lightly so far in the Iran-related stock rout.

That’s the inverse of the recent trend, and it shows how cruel markets can be. A year ago, Goldman Sachs asked its professional clients what they expected to be the world’s best-performing equity region. A record 58% chose U.S. stocks. They rose, but the U.S. was among the world’s worst-performing major markets in dollar terms.

Between last January and the end of this February, an investor in non-U.S. developed-market stocks made two-and-a-half times as much as the S&P 500. Emerging markets earned three times as much, and those in the best-performing major market, South Korea, did more than five times as well.

The cruel part: Many investors noticed and upped their exposure to foreign markets recently, just in time for the past week’s brutal reversal. Soaring oil prices are scary for everyone, but especially for countries in Europe and Asia that aren’t as energy independent as America. And the first was last: An ETF that tracks South Korean stocks fell 14% last week and is set for another tumble Monday.

The immediate thought most investors have at times like this is what risky things to avoid, not what exotic thing to buy. Adversity creates opportunity, though: Investors who thought last month that they had too little foreign exposure can get it on sale now.

America’s weight in global equity markets is about 61%, not far from its highest share ever. And foreign markets are about 40% cheaper on long-term valuation measures.

Differences in the corporate profit hit from Iran are unlikely to exceed the few percentage points of underperformance already baked in. Foreign markets are also less reliant on the investing theme du jour, AI.

Diversification is almost never a bad thing, and crises don’t last forever. The long-term benefit of having enough foreign exposure c#mira ould be worth multiples of the recent setback.
@Mira - Trust Layer of AI #crash $MIRA $AI
 


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