Traditional diversification falls short as US stock rally dominates

Traditional diversification falls short as US stock rally dominates

Investors who followed traditional diversification strategies are watching with frustration
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Investors who followed traditional diversification strategies are watching with frustration as US stocks, particularly the S&P 500, continue to outperform. Despite averaging 6% annual returns, diversified portfolios have lagged behind the S&P 500 for 13 of the last 15 years. This trend has sparked debate over the efficacy of diversification, with some questioning whether the strategy still makes sense amid the ongoing US stock rally.

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By Lu Wang

They did everything right — spreading out bets far and wide across bonds and equities in case things went south. Now, after heeding Wall Street's mantra to diversify for the long haul, these investors are watching with envy as the US stock rally leaves them in the dust yet again. 

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