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No. of Recommendations: 2
Diversification is, proverbially, the only free lunch in investing. As a form of risk management it may not be free, exactly, but close enough. Historically it is easy to create diversified portfolios that outperform on a risk-adjusted basis. Whether that will be true going forward from here is hard to say, given the parlous state of the bond market.

Reaching too far afield for "diversification" seems to me akin to reaching too hard for yield. It can sound superficially plausible, but there are probably hidden pitfalls to look out for. To take an obvious example: the fact that assets like unhedged foreign bonds are not correlated with US equities does not necessarily mean that adding them reduces portfolio-level risk. It might, sure, but you can also just end up diversifying risk, without reducing it. That sort of thing requires a lot more due diligence than the classic 60/40 Coffeehouse Port back in the day.

My two cents.

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