Does Diversification Really Work | 615

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? 

Key Talking Points of the Episode
[01:34] Invest with PreREO!
[02:28] What do financial advisors say about diversification?
[03:51] What do successful investors say about diversification?
[08:09] What is the problem with the S&P 500?
[09:05] Are you diversifying by investing in stocks and bonds? 
[12:15] What are the different asset classes you can invest in? 
[13:05] What are paper assets?
[13:38] How can you invest in businesses?
[15:50] Why is it important to know what you’re investing in?
[16:23] What can you do in the real estate space?
[18:45] Is my portfolio diversified?
[19:47] How can you diversify effectively?

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.”

“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.”

“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.”