Diversification Doesn't Work... Anymore

Investors have been told for years that diversification lowers risk. While that may be true in certain instances, it certainly isn’t true in the world equity markets. Let me give you an example: Had you purchased the five ETF’s that we track in MarketClub’s “Global Strategy Portfolio” on January 2, 2008, you would have seen your equity diminish 29% in the space of 30 months. However, had you followed the “Global Strategy Portfolio” with the same five ETF’s, you would have seen your equity grow 23% in the same time-frame. With a 52% difference between the potential for profit and the potential loss, those are numbers that no investor can ignore. As the strategy name suggests, these five global ETFs in question could not be more diverse. We refer to these five ETF’s as BRICA since they represent Brazil, Russia, India, China and Australia. So what makes the MarketClub’s “Global Strategy” different from a buy and hold strategy? The big difference is that you’re not in the market all the time. In fact, you are only in the market about 50% of the time based on MarketClub’s “Trade Triangle” technology which will tell you when that particular ETF is headed higher. When the market is headed down on the other hand, you are safely on the sidelines sitting in cash or an interest-bearing instrument and waiting for a signal to re-enter. Every Success, Adam Hewison Co-founder of MarketClub.com