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The Time To Diversify Is Now.. I Mean Really Diversify

11 August 2010 No Comment

Investment professionals love to tout the term diversification.  It oozes of sophistication and safety.  Yet the problem is that they don’t want you to really diversify, just within the areas where the will still make money.  Cash?  Gold?  No, I don’t mean those of course.  I can’t make money off those things!

What I’m talking about is real diversification.  Diversification outside the financial system.  Diversification into real goods that have real value.  Diversification out of paper assets.  I’m not saying you should abandon stocks and dollars, but the time to diversify is now.

Each day that passes and each piece of legislation that borrows money to “extend benefits” to those who need them moves us one step closer to inflation.  Each piece chips away another piece of purchasing power from your money.  Each time the Federal Reserve moves to “save the economy” they are really just saving their own asses at your expense.  As such, it’s time to diversify out of things that they can affect.

Currently, you’re probably diversified across industries within your stock portfolio.  Uhh, not good enough.

Start considering the following:

  1. gold coins
  2. silver coins
  3. dollars and other currencies
  4. energy – huh? how do you own energy?  well, brainstorm this one…
  5. land (useful land)
  6. food
  7. guns
  8. ammunition
  9. water
  10. consumer goods that you will always need

Do I sound crazy?  Maybe, but I probably have your attention.  I’m not saying the world is ending, but the above list represents items with real value, useful value, and some of the items might offer good investments if inflation or supply shortages occur.  Actually the fiat currencies don’t really represent real value but they do offer a diversification out of equities that many people desperately need.

As more of your rights are infringed upon and more of your purchasing power is lost, the more people will start turning to real stores of value.

Now, I’m not saying sell all your stocks (although you may want to) – I still own stocks, but I would recommend owning stocks that pay dividends and that will perform in prolonged periods of economic downturns.

A Question For You…So, how many items in the list above do you have some exposure to?  For me… I score a 7.  I own real estate, but I wouldn’t call it useful land as in productive land.  It’s a postage stamp property with a suburban home on it.

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