Diversification is really a form of humility, in our view.  The future is uncertain, which is why we diversify.  At RiverFront, we seek to improve the basic principle of diversification by outweighting investments that our Price Matters methodology indicates have a better long-term risk/reward outlook and underweighting those for which we believe the outlook is poor. 

Diversification is NOT an assurance of higher returns, it is NOT a panacea.  In our view, it is a belief that spreading your investments across different countries and asset classes reduces risk by smoothing returns.  One way diversification does this is by allowing the positive performance of most of a portfolio’s investments to dampen the effects of a few unique risk events in the portfolio.  It is a time-tested investment principle in which we believe, especially if strategic rebalancing occurs.

David Fuller's view

Here is The Weekly View.

There is considerable wisdom in this essay on diversification which gets better and better as it is developed.  Subscribers will be interested in the historic examples and perhaps particularly in the comments on emotional challenges.  That is one area where every investor can improve, preferably with the help of perspective gained from others, without having to wade through every challenge oneself.