Morningstar

5 Mistakes to Avoid With Your Investment Portfolio in 2026

The Morningstar video, hosted by Margaret Jazz and featuring personal‑finance director Christine Benz, outlines five common portfolio mistakes investors should dodge in 2026. The discussion centers on why past performance should not dictate future allocations and how disciplined diversification can protect against market concentration. Key insights include: don’t write off equities because the market feels pricey; instead, tilt modestly toward small‑cap and mid‑cap value stocks that remain under‑appreciated. Non‑U.S. equities still trade at discounts relative to U.S. benchmarks, offering sector breadth in financials, materials and industrials. Near‑retirement investors should de‑risk by allocating 7‑10 years of anticipated spending to cash and high‑quality bonds, preferably within tax‑advantaged accounts or via new contributions. Finally, avoid over‑reacting to Fed moves and set realistic return expectations—sub‑10% equity returns and current 4% Treasury yields are more prudent baselines. Benz emphasizes, “Don’t assume all stocks are expensive,” and recommends a small complement of small‑cap/value index or active funds. She notes that “most U.S. investors hold less than a third of their equity abroad,” and urges a “bucket approach” for retirees, keeping short‑term cash, medium‑term bonds, and long‑term equities aligned with spending horizons. She also cautions against using the decade‑long 15% equity return as a planning metric. The implications are clear: investors who rebalance toward undervalued segments, broaden global exposure, and temper expectations will likely achieve smoother returns and lower drawdowns as markets evolve. By aligning asset allocation with personal timelines rather than macro forecasts, portfolios become more resilient to volatility and policy shifts.