Why your portfolio is less diversified than you might think!
This is a great article from the Economist on Diversification. Important read for understanding - https://www.economist.com/finance-and-economics/2025/01/30/why-your-portfolio-is-less-diversified-than-you-might-think This is why following the 4D Wealth Framework is so important.... Want training on this? Comment "4D WEALTH" below... Here are Five Key Takeaways from the Article: 1. True Diversification is Harder to Achieve Than It Appears While it is easier than ever to invest in a variety of assets, true diversification—where different investments offset each other’s risks—has become more difficult. 2. Global Financial Integration Has Increased Correlations Markets that once moved independently have become more synchronized. The average correlation between developed markets increased from 0.37 in the 1970s to 0.75 in 2021. (meaning they basically all move together) 3. Geographical Diversification is Losing Its Edge The benefits of investing across different regions have diminished as markets behave more similarly due to globalization and capital flows. 4. Stock and Bond Correlation Has Increased Traditionally, stocks and bonds balanced each other (e.g., -0.29 correlation from 2000-2021), but since 2022, their correlation has risen to 0.7, reducing diversification benefits. 5. Investors Are Seeking Alternatives As traditional diversification strategies weaken, investors are exploring alternative asset classes, such as property, commodities, cryptocurrencies, and private assets, to maintain portfolio resilience. In a recent live session with Clem Sunter, I shared the 4D Wealth Blueprint which helps you manage this significant challenge to your investments and portfolio. I want to give this to you as a gift - https://askclemsunter.com/4d