I'm certain most of you have at least once in your life played the game of musical chairs. This game consists of chairs aligned in the center of an area, and people walk, dance or run however they want around the chairs while the music is playing. Once the music stops, the objective is to sit in a chair and secure your continuance in the game. The game seems very simple, but there is a catch; there are fewer chairs than people, so in the end it turns into a fight for survival among all the players.
I've mentioned diversification in other articles, because for me it's a key element in a well-balanced investment portfolio. In this changing world, traditional portfolios are becoming less efficient, and managers need to update their strategies in order to protect their client against future events. The fact that a catastrophe or crash hasn't taken place doesn't mean it never will. Investors trust their advisors to manage their assets and protect their wealth against such occurrences. The only way to accomplish this is to guarantee clients a chair when the music stops.
I've been an advocate of gold, silver, and other real assets for some time. I don't believe the end of the world is going to happen tomorrow or the day after, but I'm sure that events that may sound ridiculous or crazy (monetary crisis, crashing financial markets, etc.) are definitely possible in these uncertain times. A machine giving people the ability to fly was also a crazy idea, but now we can fly every day at all times; we're even seeing flights to space as a touristic attraction these days.
Every market is cyclical - a climax followed by a correction. Trying to time the market is a stressful, energy-draining, time-consuming endeavor that will not have positive results in the long run. Just like baseball hitters are more efficient by hitting the ball rather than trying to get a home run every single opportunity, diversification is required in each investment portfolio in order to protect investors and obtain better returns.
Consider alternative investments. Things are always changing; whatever worked to position you where you are doesn't mean it will work to carry you forward from here. In the same way that big, profitable companies such as Coca Cola are constantly updating their strategies and never taking their market for granted, you should consider different variables and invest accordingly.
Don't wait until the music stops to try and save yourself. Prepare now, and go get that chair!