A correction could be coming. Are you ready for opportunity?

News.com.au

3 days ago

Global exposure is no longer a luxury, it's a necessity, writes Nigel Green. But for smart investors it's not just about reducing risk, it's about opportunity.
There's a dangerous illusion in markets right now: a belief that the rally can keep defying gravity, that risks are priced in, and that the current momentum will carry us through.
I don't believe that's true.
In fact, I believe a correction in US stock markets of up to 10% this quarter is a real and rising probability.
I'm far from alone. A growing chorus of global financial institutions is now cautioning that sentiment is outpacing substance – and that overexposure to the US is a risk no serious investor should be ignoring.
The S&P 500 may have surged 30% so far this year, but the foundations beneath that rise are starting to crack.
Consumer spending is weakening, inflation remains far more persistent than policymakers expected, wage growth is squeezing corporate margins, and President Trump's revived trade war is already beginning to ripple through supply chains – raising costs, pressuring businesses, and beginning to show up in the data.
This isn't market pessimism. It's macroeconomic reality.
The ISM services index has just posted its first contraction in over a year. Consumer confidence is sliding. Unemployment claims are rising.
Companies are issuing more cautious forward guidance, and talk of stagflation – once theoretical – is now being discussed seriously by economists who had spent much of the past year painting a softer landing.
False sense of security
What's most concerning to me isn't the possibility of a correction. Corrections are part of market cycles. What's concerning is that many investors don't appear remotely prepared for one.
There's a false sense of security built into many portfolios today, especially those that have benefited from US-heavy exposure over the past decade.
The story was simple: strong consumer base, tech dominance, a global safe haven. That story carried investors through some remarkable years. But it's no longer in sync with current conditions.
Too many portfolios that claim to be diversified are still heavily concentrated in US assets – often 60% or more. They may be labelled 'global' or 'balanced', but when you drill into the weightings, it's clear that the US is still doing the heavy lifting. That kind of concentration makes sense in boom times. It's reckless in moments like this.
Forward-looking repositioning
At deVere, we're working with clients around the world to rebalance away from this overexposure. We're urging global diversification – not after a pullback, but before one. Not as a knee-jerk defensive move, but as a deliberate and forward-looking repositioning strategy.
This isn't just about reducing risk. It's about identifying where opportunity is building with more sustainable fundamentals and less political friction.
Singapore is a case in point. Its main index is up nearly 5% in the past month alone, driven by solid exports, strong services demand, and a stable policy environment. Inflation is under control. Investor confidence remains intact.
Europe is also showing fresh signs of resilience. Germany's DAX is rising as industrial production improves. The FTSE 100 continues to attract yield-seeking capital, offering both income and relative stability as volatility returns elsewhere. In selective emerging markets, demographic trends and disciplined fiscal policy are creating new areas for long-term capital allocation.
I'm not suggesting investors abandon the US. It will remain a core global market for decades to come. But no market stays on top indefinitely. Cycles rotate, growth migrates and policy environments evolve. It's essential that portfolios do the same.
We're entering a moment where the cost of delay could be high. Once sentiment shifts, it often moves quickly and sharply. Trying to reposition during a correction is difficult. Doing it in advance is prudent.
'Not just a warning, but a window'
Global exposure is no longer a luxury, it's a necessity. That's not just a professional view, it's a personal conviction I hold after decades of watching cycles unfold, risks build, and investors learn the hard way that yesterday's assumptions don't always protect tomorrow's capital.
For those willing to step back from the noise and rebalance with discipline, this moment presents not just a warning, but a window.
The most successful investors aren't the ones who react once the cracks appear. They're the ones who move while the surface still looks calm.
Nigel Green, is the group CEO and founder of deVere Group, an independent global financial consultancy.
The views, information, or opinions expressed in the interviews in this article are solely those of the author and do not represent the views of Stockhead.