Which “Diversified Investor” are you?

Cliff in HawaiiHow many times have you heard that the best way to invest your money is to diversify? So what exactly does that mean to you?

Having many years of experience as a Registered Rep with various broker dealers, I know that my peers are trained to “sell” asset allocation portfolios to help their clients diversify. Our training included assumptions such as, “you need to have a blend of Large Cap, Mid Cap, Small Cap Equities, plus some corporate bonds, government bonds, perhaps inflation protected treasuries, along with International or global funds or companies, to really own a diversified portfolio”. It seemed a little off-balance to me, as I pondered how to best serve my clients in this “New Normal” economy.

When March of 2008 happened, how did all those asset classes perform??? It wasn’t pretty, and so much for that diversified portfolio. However, we’re now at the point of “market recovery”, ain’t that grand?!  To hear the media report it, “the market has risen 100% since 2008”.  Oh goodie, now my account is just where it was 4 years ago! How does that translate into a 7% rate of return on your retirement projections?

Perhaps I sound a bit cynical but my reality tells me that we will not see this market continue to rise, so now may be a good time to re-evaluate your plans. We’ve been letting our client accounts recapture their gains, using charts and simple moving averages to keep us “in the money” and being alert to the need for protecting principal once we do decide to “lock in the gains”…

How often have you been presented with a true all-asset class diversified mix, including real estate, precious metals, foreign currencies and commodities as a foundation for your investment portfolio? This works well for both your short term and longer term [i.e. Retirement] wealth buckets.

Here is an article on silver and gold that might interest you.