Does Diversification Really Work | 615

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Financial advisors tell you to diversify your investments, but successful investors like Warren Buffet say don’t do it. What are you really supposed to do? Should you diversify or not? Does diversification really work? How do you truly diversify your investments?

Listen to this episode to find the answers to your questions about diversification and to better understand what you should do to have a diversified investment portfolio!

Quotables

“The truth is, you still lose money. Why? Because you’re not really diversifying, because you’re buying in the same asset class of equities, stocks, and things like that.”

“For those of you that are in the market right now, you’re already looking at possibly a 20% loss, maybe more if you’re not even getting the market returns.”

“Diversification, as practiced generally, makes very little sense for anyone that knows what they’re doing. It is a protection against ignorance.” – Warren Buffet

“When you don’t know what you’re doing, just throwing your money at everything is a bad strategy.”

“If you think about it from a monetary standpoint, if one is bad, it’s worthless.”

“Maybe a few of them won and a bunch of them lost, you might be feeling grateful you lost a little bit less, but the truth is, people don’t really see that.”

“Whenever you see the stock market do something, people’s returns are typically less, even if they buy the S&P 500 which is supposedly supposed to be diversified.”

“The S&P 500 is not equal across the board with the stocks they have. There’s no weighted average there.”

“Even when people are losing money in crypto, some people have made money in crypto because they went deep and they really understood that asset class.”

“The problem is, and this is what financial advisors took advantage of, is that most of us don’t wanna become financial experts in certain areas, so as a result we just kinda throw spaghetti on the wall and hope something works.”

“If you look at those 4 asset classes – business, real estate, paper assets, and then of course, the last one is commodities.”

“Really, everything that a financial advisor offers you is a paper asset.” “He goes in specific markets. They are diversified, but he’s not investing in everything. He’s investing in very specific sectors and he buys into those businesses.”

“Instead of investing with 20, 30, or 40 people, I’m gonna invest with maybe 5 people and that’s it.”

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