The theory of diversification is that when large cap stocks (i.e. the S&P 500) are down, internationals and small caps will be up. So, I would recommend <SNIP>not exactly (tho i stand ready to be corrected). theory of diversification is that when one sectorgoes down, the others will do something else, perhapsgo up, perhaps go down less, perhaps go down more. Soyou have a kind of 2/3 chance that if one is in the tank,the others are 'better'. [Used to be a rather niceinverse correllation between stocks and Bonds, but i'mnot sure that's held lately.]*i* would Not recommend --you have to decide whether totry to pick a horse and bet on it, or bet on all three,or all five. In the long run, you will do best if youpick The Winner, worst if you pick The 'Loser'.but i can tell you what i *do* --since my 401(k) isshort term, i gamble. i tried to pick the likely winnerfour years out.'tis important (and , IMO, "Foolish"), to determine whatyou will be compfortable with over the time-span ofyour investments.good luck,jp
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