Your Diversification

Diversification is when a farmer grows various crops, even if some are less profitable than others. Environmental factors may hurt wheat (more profitable) production but help maize (less profitable) production, so having investments in both balances profitability with volatility. 

Diversification can limit upside potential, or appreciation. It simultaneously helps ensure that no one day in the market kills your portfolio. An event can help maize and hurt wheat, but generally won’t impact both the same. 

Diversification doesn’t begin and end in your stock portfolio, you can apply the lessons of diversification to your personal and professional life. 

Professional life: 

Think of your day job as one investment. It may be lucrative in that it pays you the most in life, but it is subject to negative events: recesssions, industry cycles, etc. To ensure less life-volatility, you can diversify into: 

• Media Side Hustles. Pair an existing skill-set with the skills you’ve built at work to create niche media that eventually can be monetized.

  • A Management Consultant who starts a newsletter writing about their niche working with retail organizations.

  • An Engineer who starts a TikTok page devoted to details about their on-site work recycling batteries. 

• With quality production and personal stories, these channels can grow large enough to support monetization via advertising. 

• Complementary Career Pathways. Amplify your current capabilities into an arena where you can get paid. 

  • Find employee organization groups that are part of external events, and apply to be a panelist. Eventually, and with hard work, paid speaking opportunities will come up. 

  • Build a robust network, then host networking events and monetize via advertising or paid entry. 

Personal life: 

It may be a bit sensitive, but think about your main friend group as one investment. You always spend time with them, but eventually there can be a week where you have extra tickets to a baseball game and no one is available. You can go alone, but you don’t really want to. 

• Invest in multiple groups of friends. Have a group from work and a group from the gym to complement your current social circle. Having multiple networks will ensure you always have someone to give an extra ticket to, and limit your risk of a Friday night at home.

Think of exercise as another portfolio where you spend time to get a physical and mental return. If you spend too much time running, you run the risk of injuring your feet and not being able to run anymore.

• Diversify into multiple types of cardio: running, hiking, walking, bicycling, and swimming to ensure you have options in case of injury.

• Further diversify by including strength training into your mix. Strength training is the only way to build and maintain muscle mass, which is important for overall mobility and metabolic health.

Diversification is a lifelong skill to develop and maintain. Specialization can seduce in the short-term, but diversification always wins out over the course of a lifetime. 

PK