The second quarter of 2026 was a good one for international stocks. Genuinely good, not the kind of lukewarm uptick that gets oversold in a headline. Dodge & Cox put out their Q2 commentary for their International Stock Fund, and the numbers caught my attention.

International equity markets rallied sharply from April through June. If you have been sitting entirely in domestic funds, you missed it. And I know exactly what some of you are thinking, because I have heard it for thirty years: why would I bother with international when US markets have done so well?

Because quarters like this happen. They always do.

Let me walk through some basic math. Say you have a portfolio that is 100 percent in US stocks. In a quarter where American markets are flat but international markets rise 8 percent, you gain nothing. Zero. But if you held even a modest 20 percent in international funds, you would have captured a piece of that gain. On a $100,000 portfolio, we are talking about $1,600 you simply would not have seen otherwise.

That is not a life-changing amount. I am not pretending it is. But compounding works on gains of all sizes, and over twenty or thirty years, those quarters add up to real money.

The Dodge & Cox International Stock Fund is one of the older, steadier players in this space. They run a value-oriented approach, meaning they look for companies trading below what they think the underlying business is actually worth. Sometimes that means they are early, sometimes they are wrong, but over long stretches the discipline tends to work. Their commentary noted strength across several regions and sectors, which tells me this was not a narrow rally driven by one country or one industry getting hot. Broad-based gains are usually healthier than concentrated ones.

I do not own this specific fund. I want to be clear about that. But I have held international index exposure for decades, and it has been the most underappreciated part of my portfolio. When domestic markets had a rough stretch, international holdings softened the blow. When domestic markets were flat, international sometimes carried the load. Not always. Not every year. But enough to matter.

Here is my question for you: what does your international allocation look like right now? If the answer is "none" or "I never really set one," you might want to think about that. Most advisors suggest somewhere between 15 and 30 percent in international holdings for a balanced long-term portfolio. Some go higher, some go lower. The exact number matters less than having a number and sticking with it.

I remember sitting in my living room in 2002, watching my domestic-heavy portfolio bleed while international holdings, which I had only added a year earlier on something close to a whim, kept things from looking like a complete disaster. That was the quarter I stopped treating international as an afterthought and started treating it as a permanent part of the plan.

Cassie Welch would probably tell you that international funds add too much currency risk for the average investor and that you should keep things simpler. She is not entirely wrong. Currency fluctuations can eat into your returns, and the math gets messier when you are dealing with exchange rates on top of stock prices. But I would rather deal with a little extra complexity than miss an entire quarter of gains because I refused to look past my own borders. We have had this argument more times than I can count.

The point is not to chase whatever just went up. International stocks had a strong quarter and they could have a lousy one next. That is how markets work. The point is to build a portfolio that captures gains wherever they happen to come from, because nobody knows in advance which region will lead the next rally.

Diversification is boring. I have said that a hundred times and I will say it a hundred more. It is also the single most reliable thing I have done in forty years of managing my own money. Broaden your exposure, set your allocations, and let time do the heavy lifting.

And as always, I am sharing what has worked for me, not telling you what to do with your money. Talk to a real advisor if you need personalized guidance. That is what they are there for.