How Well Does Diversification Work?

Doug of d-short fame looks at the above question, and concludes, not so much:

Diversification is a cornerstone of Modern Portfolio Theory and portfolio risk management. We spread our investments across a range of asset classes to ensure participation in the upside and reduce exposure to the downside. This is a time-honored strategy that works … most of the time. But during epic market downturns, asset classes tend to march to the same dismal drumbeat.

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via D-Short

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