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The events OP is talking about are not normal market fluctuations: > wars, bankruptcies, currency devaluations, revolutions, government confiscations, hyperinf
by cheriot 6y ago
The events OP is talking about are not normal market fluctuations:
> wars, bankruptcies, currency devaluations, revolutions, government confiscations, hyperinflationary periods, and other economic cataclysms
Those are primarily political risks. Not independent events, of course, but very different than correlations between asset classes.
- nradov 6y agoSo what? Regardless of the cause, the point is that there will be occasional "black swan" events when all major asset classes fall together and diversification becomes less effective.
- cheriot 6y agoZoom out farther. Markets regularly take major hits and then recover, but someone only invested in local markets in 1914 France or Venezuela today is starting from scratch. OP was talking about the events that leave people with nothing. Those are political events and diversification is about which governments one is exposed to.