I know, I know, the hook for this quarter’s review should be something like “World Cup Investment Strategies; Scoring Big Goals For Your Retirement,” but I’m going against the grain, as I often do, so let’s talk F1 Grand Prix racing. I’m a big fan of F1 racing; I got hooked when the “Drive To Survive” series came out on Netflix in 2019. One insight I’ve had is that the driver mindset has a lot of analogies to the investor mindset. 

To set the stage, on any given race day, there are points given if you place 1st (25 points) through 10th (1 point). If you finish a Grand Prix race below 10th, then you get no points. But there’s a whole season of races, and the grand prize is really at the end of the season. There is both the drivers’ champion (the individual driver with the most points at the end of the season) and the constructors’ champion (the team, consisting of two drivers, with the most points at the end of the season).

During a race, every driver on the grid wrestles with the same tension: win the race in front of you right now, or protect your shot at the championship months from now. Say a driver is a few car lengths behind the guy ahead of him. He can floor it, dive up the inside, and try to make the pass stick this lap. Sometimes it works. But push that hard, that often, and you cook your tires early, or you misjudge the gap and put the car in the wall. Either way, the race you were trying to win is over, and so, potentially, is the championship. The best drivers know that today’s position isn’t the point; the points are the point. That’s why, even mid-battle, you’ll hear a radio call from the race engineers: “box this lap,” “manage your pace,” “that’s not your race.” It’s not the driver losing his nerve; it’s the team pulling him back to the bigger picture. Behind every one of those calls is a small army of engineers, on-site and back at the factory, running numbers and probabilities, not certainties, and turning that math into a strategy the driver can actually execute at 200 miles an hour.

Push too hard in the moment, and you can crash out entirely, and the championship slips away. So racing, when you strip away the noise, is really an exercise in risk management with one eye always on the season-long scoreboard.

That’s exactly the dynamic investors live with every day. The itch to chase today’s move, react to today’s headline, or “win” this particular market moment is real, and giving in to it too often is how a portfolio’s long-term goal, a comfortable retirement, for example, quietly gets put at risk.

There’s another piece of it too: the races nobody sees coming. There are plenty of Sundays where a driver is buried in the pack, seemingly out of contention, and then, when least expected, cars ahead of him crash out or break down and retire. Suddenly he’s on the podium, not because he forced anything, but because he stayed in the race, kept his equipment intact, and was positioned to take advantage when things shifted. Investors face the same kind of moments, usually when markets are down or the world feels riskier than usual. The instinct is to bail. But those who stick with a plan, rather than abandoning the goal at the first sign of trouble, tend to be the ones still in position when conditions turn back in their favor.

In summary, focus on your race- don’t try to race somebody who is on a different investment strategy as they might not have the same goals and team working for them.

Reminder: Resources for those holding concentrated stock positions with high embedded gains. Feel free to read my latest article “The Concentrated Stock Dilemma” or go directly to the “Concentrated Stock Questionnaire” to help find what solutions might be available for you based on your scenario.

Final note: Have you ever thought about retiring outside of the U.S.? Here’s an article you might be interested in: 

“15 Countries Offering Retirement Visas For $2K (Or less)

It doesn’t cost a fortune to retire in a tropical paradise.”

Market Review: 2026 Q2

This past quarter was a great example of the benefits of international diversification as Emerging Markets beat all listed indexes at 24.05% for the quarter. It wasn’t too long ago when the S&P 500 was everyone’s great story. The “U.S. Stock Market” still did a very respectable 15.44%, while “International Developed Stocks” returned 10.22%. The indicated bond markets were also slightly positive, so across the board, positive quarterly returns for all indicated indexes.

A question that often comes up is the following: “What percentage of my portfolio should be allocated to international/emerging markets vs the U.S.”? When answering this question, people often mistakenly look at GDP numbers. In reality, if you want to closely replicate the global market proportionally as it actually looks for investors, a better starting point is to look at the overall relative market capitalization between the U.S. and international/emerging markets. As of the end of Q2, the U.S. market represents 63% of the overall global market capitalization, or $72.3 trillion. So, if you want a truly diversified global portfolio, a good starting baseline for equities would be about 63% in the U.S., and 37% allocated to developed international and emerging markets. And of course, this changes over time, so continued rebalancing is recommended.

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bo nd Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2026 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2026, all rights reserved. Bloomberg data provided by Bloomberg.

For the U.S. market, small-cap stocks generally outperformed large-cap stocks by a significant margin. Another lesson in diversification for the quarter, as many investors tend to be overweight in U.S. large-cap growth stocks.

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Value (Russell 1000 Value Index), Large Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Value (Russell 2000 Value Index), and Small Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Dow Jones US Select REIT Index used as proxy for the US REIT market. MSCI data © MSCI 2026, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

Morgan H Smith Jr. is an investment advisor with WorthPointe, LLC, a registered investment adviser in San Diego, Calif. WorthPointe is registered with the Securities and Exchange Commission (SEC). Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the commission. WorthPointe only transacts business in states in which the firm is properly registered or is excluded or exempted from registration. A copy of WorthPointe’s current written disclosure brochure filed with the SEC, which discusses among other things, WorthPointe’s business practices, services, and fees, is available through the SEC’s website at https://adviserinfo.sec.gov/firm/summary/143996.

Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Nothing provided in this document constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. All investments involve risk and are not suitable for all investors. 

This document may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential,” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions; changing levels of competition within certain industries and markets; changes in interest rates; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of WorthPointe or any of its affiliates or principals or any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date they were made.

1 Past performance is no guarantee of future results. Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees.  Investors cannot invest directly in an index.  Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ from actual trading.

Neither Dimensional Fund Advisors LP nor Avantis Investors are an investment advisor registered with the Securities and Exchange Commission with no affiliation to WorthPointe. Index performance does not reflect the expenses associated with the management of an actual portfolio. References to specific company securities should not be construed as a recommendation or investment advice. 

Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), Developed ex US Stocks (MSCI World ex USA IMI Index [net div.]), Emerging Markets (MSCI Emerging Markets IMI Index [net div.]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]), Global Stock Market (MSCI All Country World IMI Index [net div.]). 

Sector returns are derived by using constituent data from the MSCI All Country World IMI Index. Returns for specific securities are sourced from the MSCI All Country World IMI Index using daily security returns. Securities without a Global Industry Classification Standard (GICS) sector are excluded. Sectors are classified according to GICS Industry code. GICS was developed by and is the exclusive property of MSCI and S&P Dow Jones Indices LLC, a division of S&P Global. S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2025, all rights reserved. Bloomberg data provided by Bloomberg.