(02-14-2021, 07:37 PM)NilesMike Wrote: When a BIG drop comes along, just about everything become correlated and diversification becomes but an investing theory.
What's needed is a better timing component to avoid the massive drawdowns. Outside of DGI my other 2 portfolios barely got nicked in the 2015, 2018 and 2020 swoons.
That comment would have made a great thread of it's own. I couldn't agree more, especially as it pertains to equities. Owning a couple stocks from all 11 sectors spares you VERY little pain when the entire market drops 30% or much worse. Add in some high yielding CEFs and those will get whacked too. Will precious metals help? Maybe, maybe not. Some cash and a VERY short-term bond fund might give you a chance to buy the equity bottom. It sure won't keep a diversified port from getting slammed. Add some leverage in any form and oh boy!
Diversification among stocks saves you from getting killed because you over invested in a bad sector or a few stocks that get crushed in an otherwise OK market. Hedging with options can help if you don't repeatedly get the timing wrong, which most of us will if we make it a regular practice.
I'll continue to run about three different strats and we'll see you all on the other side. I suspect some quarter or year soon you better be ready to react quickly if you are heavy into normal long positions and might need the money in the next five years.