5 ms·
If you look at the 2009 crash, there is no such thing as diversification anymore. All asset classes around the world dropped except for US treasuries. There’s
by baskethead 5y ago
If you look at the 2009 crash, there is no such thing as diversification anymore. All asset classes around the world dropped except for US treasuries. There’s too much interdependency now among all asset classes. So thinking that diversification will save you from a systemic crash is wrong.
- weatherlite 5y agoYou're right. And if we look at other bubbles that burst then we can reach other conclusions than 2009. Who knows what the 2025 crash will be like; will the central banks be able to buy everyone out again? How do you do it if inflation is high? And also - if the Nasdaq takes a massive hit will people be so eager again to go in or will they prefer companies that actually have earnings?
- long_time_gone 5y agoDoesn't your second statement > All asset classes around the world dropped except for US treasuries kind of invalidate your first statement? > there is no such thing as diversification anymore
- basch 5y agoWhich is why you end up with one of the lowest risk highest return portfolios being 40% bonds, 20% gold, 40% equities. Diversification isn't dead. It may be harder to find, and a conventional bogle or 60/40 isnt the optimal answer. https://portfoliocharts.com/portfolio/golden-butterfly/ https://portfoliocharts.com/portfolio/golden-butterfly/ https://portfoliocharts.com/portfolio/risk-and-return/ https://portfoliocharts.com/portfolio/risk-and-return/ https://portfoliocharts.com/portfolio/portfolio-matrix/ https://portfoliocharts.com/portfolio/portfolio-matrix/
- Animats 5y agoAll asset classes around the world dropped except for US treasuries. This time there's a good chance of runaway US dollar inflation getting worse. In the 2008 crash, the dollar was reasonably steady.