The Risk of Putting It All in One Place

February 2026

A Waugh McDonald perspective on concentration, stewardship, and long-term wealth 

From 2010 to the end of 2025 the S&P 500 delivered exceptional returns. A 716% cumulative gain can create the illusion of permanence. Investors begin to believe that large US companies will always lead and that concentration in a single market is “just good sense.” 

The reality is different. Market leadership shifts. It always has. It always will. The S&P 500’s negative decade from 2000 to 2009 remains a clear reminder that even the strongest trends reverse. 

Our work with clients is grounded in this truth. Whatever the objective, the principle is unchanged. Concentration builds fragility. Diversification builds resilience. 

Strong past returns can teach dangerous lessons 

Long periods of strong performance can create false confidence. Clients in Kenya often arrive with portfolios heavily tilted toward the S&P 500 or the Nasdaq. Not because they have made a deliberate strategic choice, but because recent performance has shaped their belief system. 

A single market portfolio can look brilliant for years. Until it does not. 

The historical illustration is simple. A portfolio fully concentrated in one market, even a great market, can behave very differently from a globally diversified one when conditions change. 

This lesson applies regardless of the stage of life or the purpose of the capital. Building wealth, sustaining wealth, drawing from wealth, or preparing wealth for the next generation all require the same foundational principle. A concentrated portfolio is inherently fragile. 

Leadership shifts quietly and without permission 

Recent years have shown early signs of rotation. International and emerging markets delivered their strongest relative year versus US stocks in nearly two decades. Valuations outside the United States remain more attractive. A softer dollar supports them. Global spending patterns are shifting in ways that broaden opportunity beyond the familiar names in the US. 

US small caps, long ignored, fit the profile that often precedes future leadership. Unloved. Underperforming. Under owned. 

Early 2026 has small caps leading the asset class tables.  

Even bonds, which many sidelined during the long US equity surge, quietly delivered meaningful returns last year. 

The pattern is consistent. Leadership rotates. Concentration magnifies the pain when it does. 

Diversification is not about being clever. It is about being responsible. 

Diversification is not the pursuit of higher returns. It is the avoidance of regret. It is about positioning capital so it can support real lives through real events. It is about removing fragility and introducing resilience. It is about acknowledging that the world changes without asking our permission. 

This is the foundation of responsible wealth stewardship, for every client and every goal. 

The objective changes. The principle does not. 

• Concentration is fragile

• Diversification endures

The Waugh McDonald perspective 

We design portfolios that support clients for decades, not cycles. 

We diversify across geographies, asset classes, valuation regimes, and economic environments. 

We help clients avoid the seduction of whatever has performed best recently. 

Our portfolios are built using a disciplined process. This includes long horizon capital market assumptions, a valuation aware approach to allocation, and continuous risk monitoring. The objective is simple. Capture global opportunity. Reduce unnecessary fragility. Build portfolios that behave sensibly across a wide range of market environments. 

• Your wealth should outlive themes

• It should outlive narratives. 

• It should outlive us. 

If you would like to explore how our framework can support long term resilience and responsible stewardship, we are always ready to have that conversation. Reach out to us at info@waughmcdonald.co.ke