Charles de Gaulle Helps Us Understand the Importance of Diversifying

Former French president Charles de Gaulle once joked:

“How can anyone govern a nation that has two hundred and forty-six different kinds of cheese?”

This comment is funny, but in every joke, there is a kernel of truth. There’s no question that the French people are strong-willed and may be difficult to govern. But in one way or another, you could make the same observation about most countries.

What does this mean from the perspective of an investor? This is yet another reason to diversify your investments globally. At any given time, different regions will look more attractive than others. Between 2000 and 2005, for example, the euro was on the rise, making European stock markets very attractive to international investors. But ten years later, between 2010 and 2015, it was the reverse. More recently, international stocks have been rising again.

The bottom line: Most every investment—and investment market—has its pros and cons. But depending on the chosen time period, the pros or the cons might be more apparent. That’s why, simple as it sounds, I believe so strongly in building, and maintaining, a diversified portfolio.