Understanding the Role of International Investing in 2026
If your portfolio is 100% US stocks—or close to it—you're not alone. Many investors stick with what they know: American companies, American markets, American success stories. It's comfortable, familiar, and for the last decade, it's worked pretty well.
But the investment landscape is shifting. Sticking exclusively to US markets means possibly forgoing certain opportunities while potentially increasing exposure to risk.
The Problem with Home Country Bias
The US stock market represents about 60% of global market capitalization. That means roughly 40% of the world's investment opportunities are happening outside the United States. If your portfolio ignores that, you're concentrating risk rather than spreading it.
You wouldn't put all your money in one company, even if it's a great company. The same logic applies to countries and regions.
When you're entirely invested in US markets, you're betting everything on the US economy, US monetary policy, and the strength of the US dollar. That might feel safe, but it's concentration, not diversification.
What's Changed: International Markets Are Competing Again
For years, US stocks dominated. The returns were better, and there wasn't much reason to look elsewhere. But 2026 looks different.
The earnings growth gap between US and international companies has narrowed significantly. Companies outside the US are becoming more competitive and better positioned for growth.
Here's what's driving that shift:
Global infrastructure investments are creating opportunities in Europe and emerging markets. AI and technology growth isn't just a US story anymore. Currency dynamics are changing, making international investments more attractive. Many countries are cutting interest rates to stimulate growth, which historically has been bullish for equities.
This doesn't mean US stocks are bad investments. It means the rest of the world is catching up, and ignoring that could mean missed opportunities.
The Risk You Didn't Know You Were Taking
When your portfolio is concentrated in one country, you're exposed to risks you might not see coming.
What happens if US growth slows while other regions accelerate? What if tax policy changes hurt corporate profits? What if the dollar strengthens and reduces the competitiveness of US exports?
Any of these scenarios could hurt a US-only portfolio while leaving internationally diversified investors potentially unaffected.
Diversification isn't just about chasing higher returns—it's about smoothing out the ride. When one region struggles, others may thrive. That's the whole point of diversification: attempting to reduce the impact of any single event on your overall portfolio.
What International Diversification Actually Looks Like
International investing doesn't mean abandoning US stocks. It means adding exposure to other developed markets (like Europe, Japan, and Australia) and potentially emerging markets (like India, Brazil, and parts of Asia).
A well-diversified portfolio might allocate 20-40% to international stocks, depending on your goals, risk tolerance, and time horizon. That still leaves the majority of your portfolio in US equities while giving you meaningful exposure to global growth.
Common Objections
"International investing is riskier." Actually, concentrating all your money in one country is riskier than diversifying globally. You're spreading risk, not adding it.
"I don't understand foreign companies." You don't need to. That's what professional fund managers and diversified funds are for.
"The US market has always outperformed." Not always. There have been long periods where international markets delivered better returns. Past US dominance doesn't guarantee future results.
"I'm doing fine with what I have." Maybe. But are you doing as well as you could be? And are you taking unnecessary concentration risk?
Getting a Second Opinion
Even if you already work with someone, it never hurts to get a second opinion on your portfolio. Financial advisors should welcome questions about diversification and be able to clearly explain why your portfolio is allocated the way it is.
If your current advisor can't articulate a clear strategy for international exposure—or if they're dismissive of the question—that's a red flag.
A seasoned financial advisor will:
- Explain how your portfolio is diversified across geographies, not just asset classes
- Show you how international exposure fits into your overall risk profile and goals
- Help you understand the trade-offs and make informed decisions
- Adjust your allocation thoughtfully and tax-efficiently over time
- You deserve to know whether your portfolio is truly diversified or just holding a bunch of US stocks that all move together.
What Happens Next
The world is bigger than the US stock market. And in 2026, the opportunities outside the US are more compelling than they've been in years.
This isn't about making drastic changes overnight. It's about taking a clear-eyed look at whether your current portfolio actually matches the word "diversified" or if you've been concentrating risk without realizing it.
International diversification isn't complicated, but it does require intentionality. And it requires working with someone who's actively thinking about your portfolio strategy, not just letting it run on autopilot.
If you haven't had a conversation about international diversification recently—or ever—now is the time.
