"How would you diversify and WHEN?"
My words should not be heeded as advice, as I'm no longer a practicing adviser and certainly would not act as one in an online forum (yes, that is a disclosure to CMA as regards industry regulations, etc)... Having said that, I'm happy to share my own thoughts on the matter.
Importantly, to me, much of the discussion involving investments is as much life philosophy as it is investment philosophy. In fact, I'd argue strongly that it's much more the former than the latter.
In that vein, to me, diversification is the Great Myth of investing. Wealth is not, and has never been, accumulated through diversification. Diversification may offer a decent way to protect your wealth while investing, but only AFTER you have accumulated it by savings or other investment means. But it is certainly not the means to wealth in itself.
On the contrary, wealth is accumulated by a combination of saving, and focusing on what you know best, and placing your betting chips accordingly. Steven Jobs didn't create his wealth by listening to a financial adviser, I promise you that; and neither has any other entrepreneur or great investor in history.
Thus, with the funds I have allocated to long-term investing, I do not seek to diversify. I seek the approval of my conscience above all else; and, knowing the risks of total loss (which exist no matter what, but are heightened with concentration), I place my chips. Let 'em ride, baby. You only get one shot at this thing called life, and anyway, paper currencies are fading fast.
Having said that, it is important, first and foremost, to distinguish what assets you actually seek to invest vs what you seek to protect (save). If you have already accumulated much, and seek to preserve, then perhaps apportioning some of your portfolio into physical silver/gold would be prudent. You don't need a big return, necessarily, on that which you have accumulated and seek to protect merely in terms of purchasing power for the long term. Just be sure you have enough in fiat liquidity for current expenditures, etc., and then you can safely convert a portion into that which maintains purchasing power more effectively than a piece of paper.
Then, for the portion that you seek to actually invest, do so by putting it into something you know well; whether that's an industry, or a business, or a region, based on your own economic expectations, interests, and life philosophy; it's entirely at your discretion and should not be dictated by prevailing conventional wisdom. We all know where that has led us.
Finally, maybe you might actually consider that conventional and overrated thing called diversification for another portion of your assets, however small or large you determine is appropriate. After all, this is more of a risk-mitigation strategy and is not without its merits. It will keep this portion of your assets from the headwinds you might otherwise experience in an investment that is concentrated on one company, sector, region, etc.
In any case, it's not a revelation to say that there is still no silver bullet. But these are some of my thoughts on investing. And as I've disclosed, most of my investable assets right now are in Asia ex-Japan... Certainly not a diversified strategy by any conventional standard.
That can and will change, as circumstances warrant in my life and as I deem appropriate. We all do the best we can with the one shot we've got.
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