program, when used in conjunction with your existing portfolio, can act
as a hedge against stock market downturns. We recommend that you
have investments in diverse areas such as owning real estate as well as
stocks, because any single
investment has its own inherent risks that must be considered.
However, as part of a larger portfolio the combination can actually
increase the portfolio's return while decreasing its risks and smoothing
out its equity curve, as explained in modern portfolio theory.
Horizontal diversification can take you only so far. Real
protection lies in adding intelligent uncorrelated investments.