Markets are reacting to fresh tensions. Diversification still works.
Hello, Reader.
Last month, I posed a challenge…
Adjust your investing habit and look beyond U.S. markets.
Today, I’d like to check in.
Let’s start with a brief tour of the home front. Navigating our frenetic stock market during the several weeks has not been an easy task. On one hand, the market is lavishing gains on select companies, but also swiftly and severely punishing others.
It feels a bit like living with a pet lion. Sure, it can be cuddly and docile, but it can also maul you… even when it’s just playing, and especially if you scratch its tummy.
Precious metals, base metals, energy, and a select “AI-Applier” companies have remained on the lion’s good side. But the lion extended a paw and took a swipe at software stocks during the recent “SaaSpocolypse,” and the sector is still nursing its wounds.
To be clear, I’m by no means bearish on the United States. I think we’re still the ground zero of innovation and capitalistic dynamism. But that doesn’t mean there aren’t other opportunities in other countries…especially when so many foreign stocks are sporting valuations that are substantially below their U.S. counterparts.
When I first posed the challenge to look overseas, I mentioned that monitoring other countries’ behaviors and what they’re doing with their capital allows you to expand your opportunistic reach.
Right now, global markets are under pressure due to higher geopolitical risk following this weekend’s events between the United States and Iran. That means we might see an increase in volatility for U.S. stocks in the near term, especially in broad market indices. Foreign markets may see the same fate, as global investors move to become more risk averse.
However, there is still a case to be made for the benefits of diversification. As I stated in my initial challenge: Over the span of a full market cycle, a dose of international exposure can provide a helpful diversification to your portfolio, while also growing your wealth.
Spreading investments internationally reduces reliance on the U.S. alone and can smooth overall returns over time. And some markets outside the U.S. may offer cheaper valuations.
Long-term investors – especially those focused on diversification – often benefit from foreign stocks over time, even through geopolitical turbulence.
One of the easiest ways to diversify into foreign stocks in uncertain times is by investing in an Exchange-Traded Fund (ETF) that holds a basket of foreign stocks. ETFs like these sometimes focus narrowly on a specific country, like the iShares MSCI Brazil ETF (EWZ). Others paint with a broader brush. The iShares MSCI Eurozone ETF (EZU), for example, holds a portfolio of stocks from across Europe..
ETFs give you diversified exposure across countries and sectors without betting on one region or stock. It’s instant diversification at a lower cost.
At Fry’s Investment Report, I have recommended foreign ETFs like EWZ that are currently capturing double-digit gains and outpacing the S&P 500 by a wide margin. While that benchmark U.S. index is hovering around break-even for the year-to-date, EWZ has soared more than 20%.
To learn more about my diversification strategy at Fry’s Investment Report, click here.
Now, let’s take a look back at what we covered here at Smart Money. Then, I’ll share what you can expect next.
Smart Money Roundup
Markets Move on Belief – Not Facts
February 25, 2026
In Wednesday’s issue, veteran trader Jonathan Rose argues that markets move on shifting expectations, not just headlines. He explains how prediction markets like Kalshi and Polymarket reveal real-money probability signals before prices adjust – and how smart traders can use these shifts in beliefs to position their portfolios. To read more about how to get ahead of major moves, click here.
How to Invest Smartly When the Market Loses Its Mind
February 26, 2026
Drawing lessons from the April 2025 selloff and other historic volatile market moments, this issue explores why investors must stay calm in order to build a winning portfolio. Additionally, I explain why I recommend shifting toward domestically focused U.S. companies and foreign firms that operate solely on their home turf. Click here for more details.
The $110 Billion Bet on Super AI – and the Moves to Make Now
February 28, 2026
Last week, OpenAI secured a record-breaking $110 billion funding round, with Amazon, SoftBank, and Nvidia among the major backers racing to achieve artificial general intelligence (AGI). However, rather than chasing well-known AI names, I recommend investors follow a three-pronged portfolio strategy to position ahead of the crowd. Click here to read more about my approach.
Nvidia’s Earnings Signal a Shift in AI Expectations
March 1, 2026
Last week, Nvidia posted a blowout quarter with 73% revenue growth, yet shares still dipped as sky-high expectations proved to be nearly impossible to satisfy. Wall Street legend Louis Navellier warns that this signals an “AI Dislocation” – a shift in market leadership toward overlooked enablers like power, cooling, and networking companies. To learn about Stage 1 and Stage 2 stocks, and the specific companies Louis is eyeing, click here.
Looking Ahead
As volatility and uncertainty become the new normal, my InvestorPlace colleague Luke Lango has a new playbook:
Flip volatility on its head… and embrace momentum trading.
While I will continue to sing the praises of value investing, Luke offers a different insight with valuable information. This strategy can allow you to move quickly in and out of stocks as they gain and lose momentum.
And to help folks employ this playbook, Luke is gearing up to launch a brand-new screener that he and members alike can use to detect “breakout socks” in advance.
He will be joining us in your next Smart Money to share more about this trading strategy and his new screener tool. So, be sure to keep an eye out in your inbox.
Regards,
Eric Fry
