One of the cardinal rules of being a successful long term investor is diversification.
This is a principle that virtually every investor is familiar with and one that every financial advisor holds out to be gospel.
Then why is it that we often look back upon our investment portfolios with frustration and disappointment when one particular area is under performing while another is shooting the lights out?
If this is what proper diversification is designed to do, than why does it create so much consternation?
Here’s a great article to help provide some perspective on the subject.
Diversification Is the Sane Alternative to Betting Big on One Investment
You made a huge mistake last year with your money. You know this now, right? The only investments in your portfolio that did very well were probably United States stocks. Bonds may have held their own, but everything else was just pitiful. International stocks performed horribly and emerging markets weren’t much better. What were you thinking? Clearly you missed a big opportunity in 2014. You should have skipped diversifying and gone all in on United States stocks. But seriously, with no proven model for picking the next winner, can you really afford to bet big on any one investment? If you had to, could you even pick one, and only one, investment for the rest of this year? The answer can’t be no! Don’t you know by now who the winner will be in 2015?
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