Most investors believe that a diversified portfolio is simply buying an index fund or spreading their investments across different industries within the United States, which is only halfway true. True diversification, as described by one of the most successful macro investors in the world, Ray Dalio, means being invested across different countries and regions as well to be truly diversified.
Of course, there is an aspect of commodity and fixed income or currency exposure in Dalio’s view, though buying stocks in other countries inherently also brings some exposure to that country’s commodity and currency cyclicality.
