The Lange Report – May 2016

Table of Contents


Why Should You Diversify?

Equity markets have experienced a sharp decline to start 2016, leading some investors to reevaluate their asset allocation. As U.S. stocks have outperformed developed ex U.S. and emerging markets stocks over the last few years, some investors might consider reevaluating the benefits of investing outside the U.S. From January 1st, 2010, through February 29th, 2016, the S&P 500 Index had an annualized return of 11.66 percent, while the MSCI World ex USA Index returned 2.26 percent and the MSCI Emerging Markets Index returned -2.28 percent. While there are many reasons a U.S.-based investor may prefer a home bias in their equity portfolios, using return differences over the last few years as the sole input into this decision may result in missed opportunities that the global markets offer. We recognize that stocks in non-U.S. developed and emerging markets have delivered disappointing returns relative to the U.S. over the last few years. However, it is important to remember that 1) International stocks help provide valuable diversification benefits; and 2) Recent performance is not a reliable indicator of future returns.

The global equity market is large and represents a world of investment opportunities. As shown in Exhibit 1, nearly half of the investment opportunities in global equity markets lie outside the U.S. Non-U.S. stocks, including developed and emerging markets, account for 48 percent of the world market cap and represent more than 10,000 companies in over 40 countries. A portfolio investing solely within the U.S. would not be exposed to the performance of those markets.

We can examine the potential opportunity cost associated with failing to diversify globally by reflecting on a recent period from 2000-2009. During this period, often called the “lost decade,” the S&P 500 Index recorded its worst-ever 10-year performance with a total cumulative return of -9.1 percent. However, when you look beyond U.S. large cap equities, conditions were more favorable for global equity investors as most equity asset classes outside the U.S. generated positive returns over the course of the decade (see Exhibit 2). Expanding beyond this period and looking at performance for each of the 11 decades starting in 1900 and ending in 2010, the U.S. market outperformed the world market in five decades and underperformed in the other six. This further reinforces why an investor pursuing the equity premium should consider a global allocation: By holding a globally diversified portfolio, investors are positioned to capture returns wherever they occur.

Are there systematic ways to identify which countries will outperform others in advance? Exhibit 3 illustrates the randomness in country equity market rankings (from highest to lowest) for 19 different developed market countries over the past 20 years. This graphic conveys how difficult it would be to execute a strategy that relies on picking the best country and the resulting importance of global diversification. In addition, concentrating a portfolio in any one country can expose investors to large variations in returns. The difference between the best- and worst-performing countries can be significant. For example, since 1996, the average return of the best-performing developed market country was 37.5 percent, while the average return of the worst-performing country was -15.7 percent. Over the last 20 calendar years, the U.S. has been the best-performing country twice, and the worst-performing once. Diversification implies an investor’s portfolio is unlikely to be the best- or worst-performing, but diversification provides the means to achieve a more consistent outcome and, most importantly, helps reduce and manage catastrophic losses that can be associated with investing in just a small number of stocks or a single country.


Over long periods of time, investors can benefit from consistent exposure in their portfolios to both U.S. and non-U.S. equities. While both asset classes offer the potential to earn positive expected returns in the long term, they may perform quite differently over shorter cycles. While the performance of different countries and asset classes will vary over time, there is no reliable evidence that performance can be predicted in advance. An approach to equity investing that uses the global opportunity set available to investors can provide both diversification benefits as well as potentially higher expected returns.

This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Diversification does not eliminate the risk of market loss. There is no guarantee investing strategies will be successful.

How Often Should You Weigh Yourself?

Doctors, researchers, fitness gurus, psychologists, your next-door neighbor, and me — it seems like everyone has an opinion about how you often should weigh yourself to achieve or maintain a healthy weight.  Researchers from the University of Minnesota and Cornell conducted a study to figure out if stepping on the scale daily and recording changes facilitates weight loss. Turns out, it does. It may also help you keep it off. Participants only lost a small amount of weight, but, over the course of several years, but they were able to maintain the loss.

I’ve lost 29 pounds since November and found that weighing myself daily provides incentive to eat healthful foods in moderate quantities and exercise regularly. All together they support a healthy lifestyle.  The biggest change for me was dramatically cutting the quantity of food that I eat.  I now have four meals per day composed of four ounces of high quality lean protein like fish or turkey, lots of vegetables, salad, and olive oil and nuts for fat.  In the past, when I was bad about diet and exercise I feared getting on a scale. And the fact is, when I avoided the scale I gained weight.  When I mustered the courage to get back on the scale, I was so upset with how much weight I gained, I started being better about diet and exercise.

Daily vs. Weekly Weigh-ins—A Dietitian’s Advice
In an interview with WebMD, American Dietetic Association spokeswoman, Dawn Jackson Blatner, RD, recommends weekly weigh-ins to avoid an obsessive approach to weight loss. “You have to ask yourself,” she says, “is this something that is setting my mood for the day? And if it is, then you’re probably not a good candidate for daily weigh-ins, and you should weigh yourself once a week.” I think you have to find a strategy that works to keep you positive and motivated—there probably isn’t a “one-size-fits-all answer.

Muscle vs. Fat—A Fitness Guru on Monitoring Pounds
Take that number you see on the scale with a grain of salt. William Sukala, MS, CS, in an article for Weight Watchers, says that, “While a pound of muscle doesn’t weigh more than fat, it does take up less space.” You can lose inches while gaining pounds, if you’re really building up muscle. In this case, it’s not the scale, but your percentage of body fat that needs to change.

Though I lost close to 30 pounds with a good diet and lots of aerobics, I also lost five pounds of muscle because I wasn’t keeping up with my resistance training.  My goal now is to get back to resistance training three times a week, continue aerobic exercise, and go from 18% body fat to 12% body fat in the next six months losing roughly 1% of body fat per month.  It’s a bit of a challenge to calculate body fat, but there are good resources on the web.  My trainer thought waist measurement would be another good measurement to track.

New Toy to Consider—the Vasper
We all like toys.  I have clients who are otherwise prudent savers have multiple classic sports cars, multiple horses, and other fun, but unnecessary possessions. You can decide where this one falls on your toy list.

The owner of Strategic Coach, Dan Sullivan, owns and highly recommends a Vasper. Never heard of it? Neither had I until I was in Toronto for our quarterly gathering.

Think of a recumbent bicycle, but instead of rotating pedals, the foot pads operate more like a step-machine, then add the arm levers from an elliptical–it is a total body low-impact workout. But it doesn’t stop there. What makes it so unique is that you then wrap compression cuffs around your thighs and biceps, add a chest vest, and perhaps a helmet, all of which circulate cold liquid. Then you take off your shoes, place your bare feet on cold copper plates and start pumping for an intense interval workout. Then, when you are done, there is the optional cool down.  You lie down on a bench that is outfitted with what looks like bubble wrap on top of the bench but actually has freezing cold water running through it.  The price of this toy– roughly $45,000. They are appearing in corporate gyms and other fitness facilities, so you might find one you can try.

Sullivan and others claim phenomenal health benefits.  To oversimplify, the claims are a 21-minute session on the Vasper is equivalent to two hours of aerobic exercise. Many high profile athletes swear by it—improving both endurance and sleep. I think I might pass on this toy—at least for now.  Another factor for me personally is that due to high cortisol levels and other factors in my personal situation, my doctor is not a huge fan of intense interval training for me.  I do, however, think we will be hearing a lot more about this or a similar technology in the future.  If you are interested, go to

If you want to spend some money on fitness devices that are less complicated, less pricey, and offer a good return on your investment Dan recommends a heart monitor, an elevation training mask, and a weight vest.  He further recommends cheap or free accountability tools that can be found at the following websites:,, and

Good luck with your fitness and health pursuits!

Southwestern Turkey Chili

1 tablespoon extra-virgin olive oil
2 pounds ground turkey, preferably dark meat
1 yellow onion, finely chopped
2 bell peppers (any color), seeded and finely chopped
2 jalapenos, seeded and minced
6 garlic cloves, minced
3 tablespoons chili powder
1 ½ tablespoons smoked paprika
1 ½ tablespoons ground cumin
1 ½ tablespoons garlic powder
Sea salt and freshly ground black pepper
1 (28-ounce) can tomato puree
1 (28-ounce) can diced tomatoes
1 avocado, pitted, peeled, and sliced, for garnish
2 tablespoons chopped fresh cilantro, for garnish
1 scallion, sliced, for garnish

In a large saucepan, heat the oil over medium-high heat until shimmering. Add the turkey and cook, breaking up with a spoon, until no longer pink, 5 to 7 minutes.

Stir in the onion, bell peppers, jalapenos, garlic, chili powder, paprika, cumin, garlic powder, 1 teaspoon salt, and a pinch of black pepper. Add the tomato puree and the diced tomatoes with their juices, reduce the heat to medium, and cook, stirring occasionally, for 20 to 25 minutes.

Serve, topped with avocado, cilantro, and scallions.

Recipe courtesy “The Blood Sugar Solution 10-Day Detox Diet Cookbook” by Mark Hyman, MD.