Learning from 2018 - Holdun

I have always stressed in good times and in bad (and last year certainly qualified as bad) that it is imperative to have a well-diversified portfolio including stocks, bonds, real estate and private equity/venture capital.


This chart, which equally weights the 10 asset classes (EW on the chart) as an example, illustrates the importance of diversification. While  a well-diversified portfolio will never be at the top of the pile, and you will hate it when stocks are doing well, nor will it fall to the very bottom and you will pat yourself on the back for being so smart. This consistency of returns can help investors from an emotional perspective, neither deliriously happy or wretchedly sad.

Diversification feels useless in any given year, but it still remains one of the best ways to manage risk over the long term, the only time horizon that should matter to investors.

At Holdun, we stress the importance of investing in asset classes that have little or no correlation to the stock market. That is why we created a number of funds some years ago to diversify our portfolios, including an Income Fund (+ 5.14% last year), an Opportunity Fund (+12.12% last year) and a Sports Oriented Fund (+27% last year). Exposure to these funds helped us immeasurably last year and will continue to do so in the future.