If “the US sneezes, the world catches a cold,” so how exactly does diversification insulate risk?

Essentially, in the event of a US Crash, how would these three ETF portfolios comparatively fare:

  1. 100% S&P 500 Index ETF
  2. 50% S&P / 50% Canadian Markets
  3. 33% S&P / 33% Canadian / 33& Asian Pacific

It is my understanding that even Portfolio 3 would not meaningfully insulate risk – so why diversify and endure the lower average returns of Foreign Market ETFs? Many are even in the red on a 6-month scale, staring down the barrel of trade tensions.

To a novice to such as myself, as an entry point – these foreign market diversifications appear on the face to be "risks", as opposed to a means to mitigate risk. Thanks to anyone who can clarify my error in thinking!

Submitted September 30, 2018 at 12:49PM by Fueghost
via https://ift.tt/2QmHe4A

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