Why a diversified portfolio can help investors achieve their long-term goals.

  • A well-diversified portfolio seeks the highest potential return while striving to manage a given level of volatility.
  • Goals, markets, and circumstances are all fluid, and investors can sometimes be their own worst enemies.
  • Even a well-diversified portfolio is only as good as it is current, so be sure to periodically rebalance your portfolio.

The U.S. stock market hit a then-record high in October 2007, when the Dow Jones Industrial Average was higher than 14,000 points. This peak proved elusive as the market would soon begin a steep decline and, by the time the market bottomed in March of 2009, the Dow was down roughly 6,600 points—a 50% loss in a scant 17 months. Fast forward to the end of 2014 when the Dow finished at 17,823 points, up more than a staggering 150% from the 2009 lows. The recovery was indeed magnificent, as magnificent as the beginning of 2016 was daunting—showing us time and again that markets can be fraught with peril for investors who do not exercise the discipline needed to be successful. Let’s take a closer look at what we mean by this.

Please see important disclosures at the end of the article.

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