#valuation-risk

#valuation-risk

Following in the footsteps of David Solomon at Goldman Sachs and Jamie Dimon at JPMorgan, Ark Investments guru Cathie Wood recently warned of the potential for a reality check for the stock market after the massive Artificial Intelligence rally that has driven the major indices to all-time highs over the last three years. Of course, "Reality Check" is Wall Street word salad for a sell-off and a potential correction.

However, for investors seeking more diversification, I think it can pay dividends (quite literally) to consider complementing a U.S. equity-heavy portfolio with some European names. Sure, going 100% (or close to it) in the U.S. names will grant you a front-row seat to America's long-term ascent, and there's nothing fundamentally wrong with doing so. However, I believe it doesn't hurt to add some international exposure as well for the value of geographic diversification and, perhaps more importantly, lower valuations.

Rocket Lab ( NASDAQ: RKLB ) has been a breakout star in the space economy, with its stock skyrocketing 600% in the past 12 months. On Tuesday, RKLB shares jumped after the company celebrated the completion of its Neutron rocket launchpad, Launch Complex 3 (LC-3), at Wallops Island, Virginia, signaling it was making progress toward its medium-lift ambitions. Yet, just a day later, the stock plummeted 11.72%, closing at $43.53, as investors reassessed its lofty valuation.