Vitamin C: Part Three
While July is so-far-so good, we don’t know if the stock market is headed out of a rough patch or falls further from here. The biggest problem for investors is the future never plays out exactly like the past so knowing what to own ahead of time is difficult. The only way we know how to protect against that possibility is through diversification.
Diversifying your portfolio is essentially “spreading your bets” across multiple asset categories. Categories move up and down and no category is consistently superior than another year after year.
By adding diversification to your investment strategy, the ups and downs of market performance are less dramatic. Use the following statements as your next dose of Vitamin C on our investment philosophy.
- Diversification takes some of the decision making out of the equation. Which fund is the best fund to get the job done is still on us.
- There is no timing involved.
- You will never miss out on the top-performing asset class if you own all of them.
- On the other hand, diversification won’t make you a killing… but you won’t lose a killing either.