Diversification does not mean owning everything all the time

  • Billy Connolly, the Scottish comedian, once said, “There’s no such thing as bad weather, only inappropriate clothing.”
  • Capital markets can be every bit as fickle as the weather.
  • Just as we need different clothes for different climates, we need to diversify across different asset classes at different stages of the investment cycle.
  • Diversification does not mean that investors need a fixed allocation to every asset class all the time.
  • This is like wearing a winter coat in July because there are only six months till Christmas…
  • ..or wearing your sandals and your wellington boots at the same time.