There’s no doubt it’s been a rough couple weeks for stocks: Both the S&P 500 and the tech-focused NASDAQ have wiped out most of this year’s gains, as of this writing.
Diversification is, of course, the key to managing risk. That includes spreading our money across the world, across stocks in different sectors and across asset classes, including bonds, real estate investment trusts (REITs) and preferred shares.
It also includes, crucially, continually adjusting our allocation to stocks, bonds and other assets as our goals, age and risk tolerance change.
That’s in contrast to one so-called “diversification” strategy we want to avoid like the plague.
This post originally appeared at Contrarian Outlook.