We encourage investors to mostly look past annual returns and keep their eyes on the market’s long-term performance. But it can be helpful to consider annual reports too, as long as we do so within this greater perspective.

Speaking of perspective, there’s also global versus domestic viewpoints. The Dimensional Fund Advisors chart below, ranking 2017 return sources, illustrates why we continue to believe it’s best to globally diversify your risks and expected returns around the world. While the U.S. S&P 500 performed nicely in 2017, returning just under 22 percent, notice how many international markets did even better, with emerging markets significantly outpacing all the rest.

Of course, from one year to the next, the reverse can easily be true. So, to quote Nick Murray, an industry thought leader:

“We will never own enough of any one idea to make a killing in it. We will never own enough of any one idea to risk being killed by it.”

This is what diversification is for.

“Instead of trying to figure out if you should #Bitcoin, or #Hedgefund, or #Index … spend that time getting clear about why you’re investing in the first place. When the WHY is clear, the WHAT becomes simple.”

– Carl Richards, Behavior Gap

All of us at Hill Investment Group are still buzzing about the Houston Astros’ incredible World Series victory on November 1. This is the first World Series title for the franchise since it was founded in 1962, and we know how much this championship means for a city still recovering from the devastation of Hurricane Harvey.

We’re also thrilled for Astros General Manager Jeff Luhnow, who is also a good friend and was one of the first people to read and endorse my book, Odds On. When Jeff took over in 2011, the Astros were the worst team in baseball. Now, they’re World Champions, and they got there by taking down the three richest, most formidable teams: The Boston Red Sox, the New York Yankees and the Los Angeles Dodgers.

Any way you look at it, this was a monumental achievement. And even without these personal connections I’d still be thrilled by Houston’s victory, because of the way they did it: They adopted a rational, evidence-based strategy, and then had the patience and discipline to let it pay off.

The first thing Jeff and the Astros did to become winners was to take the long view: They didn’t have the budget to rebuild the team overnight with expensive players—and they probably wouldn’t have done that if they could because it wasn’t a sustainable approach. Instead, they decided to develop talent from the ground up, using advanced statistics to draft the best young players and to find veterans whose unique skill sets would diversify and strengthen the roster. Then they waited… losing a lot of games while slowly transforming themselves into a competitive team. Even as some fans grumbled about the losing, the team stuck with the plan and continued to make adjustments as needed, until their commitment was rewarded with the ultimate payoff.

This story should sound familiar to Hill Investment Group clients, because it’s a good analogy for what we’re doing in the investment world. Like the Astros, we’re taking on big, deep-pocketed competition. We’re also using a rational, data-driven approach that seeks to truly understand the factors that drive success. And once we’ve used those insights to develop a plan, we’re committed to see it through—trusting our process even in the face of temporary difficulties. Because as the Astros have proven, achieving the ultimate long-term goal sometimes requires short-term sacrifices.

So once again, Hill Investment Group offers our congratulations to Jeff Luhnow, the Houston Astros, and all of their fans. Nothing makes me happier than seeing people make brave choices, and then have the discipline to stand by those choices until they’re rewarded with greatness.

Take the long view,

Matt