>>32
FAIL MOAR. Diversified portfolios have two problems:
1. Some aren't diversified. You see, you fucking investors want too much profit from your investments. So managers find themselves pressured to produce a better ROI. Presto change-o, and you find your so-called diversified portfolio chock full of the trendy bubble investment of the day. Too many of your fellow investors have woken up lately, to be told they've been holding a lot of mortgage-based securities (under many names, designed to hide the lack of true diversification). So: Diversified? MY ASS.
2. Economic collapses have far-reaching effects. Even diversified portfolios (i.e. real ones) still aren't immune to the ripple effects of serious downturns.
The major problem here is that if what you say is correct, then nearly every money manager on the planet would have one of these forms of diversified portfolios on tap, that NEVER LOSE MONEY. That's just not happening. So, something's amiss in your explanation. Perhaps it is that most money managers are bullshit artists and they are only in their jobs since investors kind-of, sort-of expect them to be there. Perhaps it also is that there is no such thing as a truly diversified, downturn-immune, portfolio. I'm leaning towards the latter explanation.
The investor world is strewn with the corpses of people who felt to great certainty that they were in a good position. They even had the media and money managers and PhDs backing them up. And they were ALL WRONG.
In short, your arrogance is your weakness, and your weakness will cost you in the long run.