Why Should You Diversify?


there’s a world of opportunity in equities

The global equity market is large and represents a world of investment opportunities. As shown in Exhibit 1, nearly half of the investment opportunities in global equity markets lie outside the US. Non-US stocks, including developed and emerging markets, account for 48% of world market capitalization[1] and represent thousands of companies in countries all over the world. A portfolio investing solely within the US would not be exposed to the performance of those markets.


Exhibit 1.       World Equity Market Capitalization

As of December 31, 2017. Data provided by Bloomberg. Market cap data is free-float adjusted and meets minimum liquidity and listing requirements. China market capitalization excludes A-shares, which are generally only available to mainland China investors. For educational purposes; should not be used as investment advice.

the lost decade

We can examine the potential opportunity cost associated with failing to diversify globally by reflecting on the period in global markets from 2000–2009. During this period, often called the “lost decade” by US investors, the S&P 500 Index recorded its worst ever 10-year performance with a total cumulative return of –9.1%. However, looking beyond US large cap equities, conditions were more favorable for global equity investors as most equity asset classes outside the US generated positive returns over the course of the decade. (See Exhibit 2.) Expanding beyond this period and looking at performance for each of the 11 decades starting in 1900 and ending in 2010, the US market outperformed the world market in five decades and underperformed in the other six.[2] This further reinforces why an investor pursuing the equity premium should consider a global allocation. By holding a globally diversified portfolio, investors are positioned to capture returns wherever they occur.

Exhibit 2.       Global Index Returns, January 2000–December 2009

S&P data © 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. MSCI data © MSCI 2018, all rights reserved. Indices are not available for direct investment. Index performance does not reflect expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

pick a country?

Are there systematic ways to identify which countries will outperform others in advance? Exhibit 3 illustrates the randomness in country equity market rankings (from highest to lowest) for 22 different developed market countries over the past 20 years. This graphic conveys how difficult it would be to execute a strategy that relies on picking the best country and the resulting importance of diversification.

Exhibit 3.       Equity Returns of Developed Markets

Source: MSCI country indices (net dividends) for each country listed. Does not include Israel, which MSCI classified as an emerging market prior to May 2010. MSCI data © MSCI 2018, all rights reserved. Past performance is no guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.

In addition, concentrating a portfolio in any one country can expose investors to large variations in returns. The difference between the best- and worst‑performing countries can be significant. For example, since 1998, the average return of the best‑performing developed market country was approximately 44%, while the average return of the worst-performing country was approximately –16%. Diversification means an investor’s portfolio is unlikely to be the best or worst performing relative to any individual country, but diversification also provides a means to achieve a more consistent outcome and more importantly helps reduce and manage catastrophic losses that can be associated with investing in just a small number of stocks or a single country.

a diversified approach

Over long periods of time, investors may benefit from consistent exposure in their portfolios to both US and non‑US equities. While both asset classes offer the potential to earn positive expected returns in the long run, they may perform quite differently over short periods. While the performance of different countries and asset classes will vary over time, there is no reliable evidence that this performance can be predicted in advance. An approach to equity investing that uses the global opportunity set available to investors can provide diversification benefits as well as potentially higher expected returns.



Source: Dimensional Fund Advisors LP.

Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss.

There is no guarantee investment strategies will be successful. Investing involves risks, including possible loss of principal. Investors should talk to their financial advisor prior to making any investment decision.

All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Investors should talk to their financial advisor prior to making any investment decision

[1]. The total market value of a company’s outstanding shares, computed as price times shares outstanding.

[2]. Source: Annual country index return data from the Dimson-Marsh-Staunton (DMS) Global Returns Data, provided by Morningstar, Inc.


Reducing The Stress of a Job Loss

Job Loss is Stressful and Complicated

Because my practice has morphed these last years from helping families in divorce to helping those in any major transition (getting married, losing a spouse, etc.), I see a lot of job loss.  It can happen so fast and be completely unexpected. What to tackle first?

Typically, when you are walked from an employer, they are going to send you home with some paperwork or perform an exit interview on-site.  In high times of stress, one's brain cannot focus and concentrate.  Listen to your exit interview, take your paperwork and go home.  Please do not sign anything until you have had a chance to review it.  You do not need the stress and pressure of the HR Director peering over you and the immediate sense of shock of losing employment to make major decisions.

Instead, write down your questions, organize your thoughts and call HR later.  


We get a lot of questions about about health insurance.  Heck, I know many people that go to work only to obtain health insurance for their family.  This is a major concern. 


By 1986 law, COBRA gives employees the right to continue coverage at the group premium rates. Typically, it is 100% of the premium (which might have been partially covered by the employer) and a 2% administration fee.  This is a viable option and can provide consistent coverage for a family while other options are researched.  The employer will send over coverage termination information and your insurance provider within 2 weeks will send you COBRA continuation options via the mail.


Outside of open enrollment, one can obtain coverage due to job-loss.  This is important to research while exploring COBRA options.  It might be less expensive to obtain independent insurance or move to a short-term coverage policy rather than pay your COBRA premiums.  I have researched this enough times with clients to know that every one family is different.  

For example, a family with young children and frequent trips to the doctor, might decide to it advantageous to maintain consistency of coverage through COBRA.  For a single person with minor health issues, a short-term medical policy through healthcare.gov can be significant savings.  

I recently read a Motley Fool article that advised to research, research and do more research.  Compare plans, check prices, and check doctor participation depending on your attachment to your physician.

Make a list of the medications you take and what they'll cost under various plans. List services you expect to need, too, such as visits to mental health counselors. Then try to estimate how much each candidate plan will cost you. Don't be afraid of high-deductible plans. If you're not likely to spend a lot on healthcare, they offer a good way to keep costs down. (Source: https://www.fool.com/retirement/2017/06/04/read-this-before-you-buy-health-insurance.aspx)


We say we are going to analyze our spending but let's face it, we get busy.  This is the time now to put that thought to action.  Sit down and list out all known expenses.  I like to use receipts and an Excel spreadsheet - a legal pad will do!  Take some time to get a handle on what needs to be paid and how you can address your imminent bills. 

What is not acceptable is ignoring it.  You cannot ignore your bills because you feel bad.  They don't care.  You can control your spending and your stress will reduce, the more your stay on top of it.  If there are small bills that can wait to be paid, call the company and ask for small payment plan or an extension while you sort things out.


You are already disciplined.  You got up every day, got ready and went to work.  Continue to do so.  Work on your resume, research new job opportunities ad treat it like your full-time job.  I see the most success and the least down time with people that have a plan. 

Get up, get ready, research, submit resumes, make calls, and have coffee with people who can help you in your field.  You will be shocked at how much time it takes to get your next awesome role.  It needs your time, dedication and attention.


There is no shame in losing a job.  It happens!  Talk to your friends, arrange to do things to keep you occupied (hikes, movie rentals, pot lucks) that do not strain your budget.  Seek support and ask for help.  Your friends want to help but they do not know how and they cannot read your mind.  

The more you can prepare for emergency, the better (like with an emergency savings account) but hey, this is life! and $h1t happens.  Breathe and know that you can do this, get better and succeed in another role wherever you may land.



401(k) Fees: The Wolf in Sheep’s Clothing

401(k) Fees: The Wolf in Sheep’s Clothing

While the 401(k) plan has been around for decades, we are just now starting to see the cycle of this strategy.

Most people know that if you save in a 401(k) plan, you're able to deduct what you put into it on your income taxes. If you put $18,000 total a year into your 401(k) and you make $78,000 a year, then only $60,000 a year of your income is taxable.

However, what people don't talk about is how 401(k) plans are constructed, charged and the responsibility of the employer in managing those plans.

The Uncertain Future of 529 Plans

The Uncertain Future of 529 Plans

President Obama recently tried to hijack 529 plans and go back on the popular benefits.

529 plans, named for their section in the Internal Revenue Code, allow people to save after-tax dollars and come in different varieties.

An employee can place a percentage of their income into a 529 plan, which grows tax-deferred and comes out tax-free, as long as the money is being used for legitimate college costs...

Prenuptial Agreements - Why the Long Face?

Prenuptial Agreements - Why the Long Face?

The value in setting up a prenuptial negotiation is that both people can lay out what really matters to them from a financial standpoint.

With various forms of insurance, we prepare ourselves and our families for the worst of circumstances. Prenuptial agreements can also be a helpful tool to prepare people for another life-changing event: divorce or happily staying married. No one plans on getting divorced before they marry, but isn’t it wise to be prepared? If you do not get divorced, it really does not matter anyway.

$99/Hour Mediation Service Aims to Serve Families

$99/Hour Mediation Service Aims to Serve Families

For parties seeking an alternative route for divorce, mediation is the best option. However, the high price tag associated with mediation can create a roadblock. I recently had the opportunity to meet with Lilliana Real, a Mediator I strongly recommend to my clients and colleagues. We had a candid discussion as to why she is launching this service and why it is so needed in our community.

Q: Can you tell me a little about yourself?

I am a family attorney for the past 9 years and I have been a Supreme Court Certified Family Mediator for the past 5 years, since 2009.

Year in Review and a Look Ahead

Year in Review and a Look Ahead

Each winter, I spend a lot of time doing what we call practice management. Before I delve into the components of this, I want to thank you for all the support you have given us this last year. Many things have happened in 2014 -- we have updated our business name, rebranded the firm, launched blogging and social media campaigns, changed registrations, created a new website and changed custodian firms where we hold our clients’ investments.

With these new practices and measures in place, we are certain that 2015 will be our best year yet. We are looking forward to helping you this year and for many after. I’d like to touch on several parts of my practice management for 2015.