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Guidelines for Achieving Broad Portfolio Diversification

The 7Twelve® Model

Building an investment portfolio is a lot like making salsa.

Great salsa is all about diversification. Only by adding diverse ingredients together can we achieve the desired outcome. However, there are some ingredients in salsa that most of us would never want to eat individually, like hot peppers or Tabasco sauce. But, without the “hot” ingredients the salsa would be flat.

Similarly, investment portfolios should include a wide variety of diverse ingredients or “assets”. Mutual funds that invest in US stocks are a core ingredient for a portfolio, analogous to tomatoes in salsa. But, US stocks are only one asset class. More asset classes are needed. We need non-US stock. But, even after adding non-US stock, our portfolio still only has “stock” ingredients. We need diversifying ingredients such as bonds, real estate and commodities.

Each investment asset adds an important dimension to the portfolio because each asset behaves differently. This diversity is vitally important in salsa  and in portfolios.

   
What Is 7Twelve?
7Twelve Model
7Twelve Performance
The Rationale
Historical Performance

Popular Documents
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The 7Twelve Portfolio: An Introduction
7Twelve Performance Update
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7Twelve Portfolio Available at Motif Investing
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7Twelve 2014 Conference, October 9-10, 2014
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