December Newsletter

December 2025 Financial Insights Newsletter - By Genti Cici, CFP®, CAIA,

December 2, 2025

Boring Is Beautiful: Why International Diversification Still Wins

Everyone knows the theory: when one market zigs, another often zags. Fifty years of research says the same thing — spreading your eggs across unrelated economies can raise long-term returns and cut risk at the same time. Yet most investors, American and Korean alike, still behave as if their home country is the only country on earth.

Two decades tell the whole story.

2000–2010: The U.S. “Lost Decade” S&P 500 total return: essentially zero after the dot-com bust and the Great Financial Crisis. A simple 60 % U.S. / 40 % international portfolio: +35 % total return with noticeably smaller drawdowns.

2015–2025: The U.S. “Dominance Decade” S&P 500: ~11 % annualized. The same 60/40 mix “only” returned ~9.5 %, but it shaved 4–5 percentage points off the worst drops and let investors actually stay the course instead of panic-selling.

Now picture yourself in Seoul. Over the last ten years the KOSPI delivered 3.7 % annualized in USD terms while the S&P 500 handed you 11 %. Korea is 1.1 % of global market cap. The United States is 47 %. Putting 100 % of your life savings into a 1% slice of the world isn’t patriotism — it’s a concentrated bet most of us would never let a client take.

Currency diversification piles on top: U.S. investors invested in foreign markets in the 2000s got a ~50 % tailwind from a weaker dollar. Korean investors invested in US Markets in the last five years enjoyed a ~33 % boost from USD strength on top of the superior U.S. equity returns (see chart below).

USD to KRW (last 5-years, Dec 2020 – Dec 2025) - See chart

Today the valuation gap is the widest in decades: U.S. stocks at 22X forward earnings, the rest of the developed world at 14–15X. History doesn’t repeat, but it often rhymes, that’s why we stay diversified.

The biggest benefit, though, is what global diversification does to your behavior. It starves the gambler inside you.

We’re watching it in real time: From a recent WSJ article, U.S. servicemen day-trading options & crypto between deployments, while Korean retail investors piling into 2X & 3X leveraged single-stock ETFs so aggressively the Korean government now wants licensing exams before letting people touch them.

These stories almost never end well.

Diversification and a long-term horizon won’t make your heart race. That’s the feature, not the bug.

As legendary Fidelity fund manager Peter Lynch famously said:

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Take the excitement somewhere else. Leave the serious money diversified, global, and gloriously boring. Let us make it happen.

To a calm and prosperous 2026,

Genti Cici, CFP®, CAIA

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