Market leadership is cyclical, and with U.S. stocks, particularly large tech companies, trading at high valuations, international markets offer another level of diversification at attractive valuations. International stocks offer economic and geographical diversification, helping investors navigate market cycles and avoid overexposure to any single country, sector, or company. The trajectory of U.S. outperformance will largely hinge on the continued dominance of large U.S. technology companies; however, history shows that no market leader remains on top indefinitely.

After two years of double-digit stock market gains, investors should temper expectations due to elevated optimism and enthusiasm for stocks. Overconcentration in high performing "Magnificent 7" stocks poses risks, and diversification through broader U.S. market exposure …

For high-quality bonds, starting yields are strongly correlated to subsequent returns. The Bloomberg U.S. Aggregate Index currently yields 4.6%, much higher than the recent past.