Year-To-Date Investment Performance Through July 31, 2026

·       Commodities have led asset class returns this year with a 39% gain, driven by a 87% surge in crude oil prices through July.

·       An important commodity is the worst performing. Gold is down 6%, primarily due to a 4% strengthening of the US Dollar.

·       US stocks, previously dominant, now deliver mid-tier performance at 10%, highlighting the value of broader diversification.

·       Portfolios diversified beyond US stocks and bonds, especially with alternatives like commodities and real estate, have outperformed concentrated portfolios.

Asset Classes

Commodities have dominated this year so far, with a 39% return, led by crude oil prices that increased by 87% as a result of the blockage of the Strait of Hormuz. On the low end of commodity prices and asset class results, gold is down 6.3% due in large part to a strengthening US Dollar that has increased 4%.

Unlike the previous 17 years, during which US stocks were the best performing asset class, they are in the middle of the results with a 10.5% return. Consequently, diversification beyond US stocks and bonds has added value this year, as evidenced in portfolio performance.

Portfolios

Holding more in your portfolio beyond US securities has benefited performance. Most target date funds (TDFs) are concentrated in US stocks and bonds that comprise more than 90% of underlying assets. By contrast, the non-industry accounts in the exhibit are broadly diversified into alternatives like commodities and real estate.

How did you do?

How has your portfolio performed? Use the Portfolio results above to answer this question. Choose your horizon (target date), risk preference, and diversification (Concentrated in US or diversified) – that’s your benchmark . How did you do?

Looking Forward (IMHO)

US stocks are currently very expensive on a variety of bases, like the Buffet barometer, buoyed up by AI. Corrections have followed previous occurrences of expensiveness. Some – like Jeremy Grantham – expect the next correction to be the worst. I think he’ll be right.

So, what will protect when US stocks tank? Because inflation is also a concern, I think real assets like commodities and real estate (especially farmland) will hold up as will Treasury Inflation Protected Securities (TIPS).

Conclusion  

The US stock market has gone up every year since 2008, except for 2022. That’s 17 years, the longest bull market. Stein’s Law says this will end: “If something cannot go on forever, it will stop.” Is the correction going to happen soon? No one knows, but being prepared is a good idea. Good luck.