Diversification

By | October 7, 2011

Do not let the recent decline in the market scare you or alter your route. Do not panic and stay the course.  You are in it for the long run.   “In God we trust”. Does any of that sound familiar?    

If you ever talked to a financial advisor, you know that they have limited solution space.  It is like a chiropractor, no matter what your complaint is, they will “adjust” your back and crack your neck (no offense to all the Chiropractors).  You might have spent hours and hours with your financial advisors to hear the same old broken record.  Stocks, bonds, real estate, fixed income instruments, make sure you have life insurance and my favorite word,” diversify”.   Ok, it is a very close second to “buy and hold”. 

Imagine you go to your doctor complaining about a particular ailment and rather than she or he gives you a medicine for that particular aliment, he or she hands you a collection of medicines and ask you to take all of them, just to be sure.  “But my liver is ok, my eyes are fine, it is my butt that is hurting”, you say.  “Let us just make sure we get no matter what”, the doctor replys.  That is exactly what diversification is, the talk of someone who does not know what hell is going on.  

 

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