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George Washington and Portfolio Diversification

Instead, he practiced flexibility and patience. Rather than engage in a full-scale, direct confrontation with the British army, he settled on a "post-to-post" strategy. Using America's vast terrain, the approach wore down his opponents and won some dramatic skirmishes.

The equivalent in the volatile investing world would be to pick your battles. Be mindful of risk and keep enough powder dry so you can seize great opportunities when they arise.

Diversification, Diversification, Diversification: Finally, one side of Washington that many miss was his enviable record as an entrepreneur and businessman.

Chafing under the yoke of his British buyers, Washington moved beyond dependency on tobacco and diversified into other crops like wheat, oat, corn and rye.

Yep, diversification is not a new concept! Washington knew how to cover his bases -- and when it comes to your portfolio, you should, too.

He was also a pioneer in developing new crop rotation techniques. He invented a new wheat-threshing process, converted his grains into whiskey and pulled massive nets of shad from the Potomac, which he packed in barrels and sold throughout the world.

Unlike Thomas Jefferson, who was continuously mired in debt, George Washington ran a profitable enterprise where nothing went to waste. America was blessed to have such a capable and experienced man to lead its revolutionary army and launch its economy.

You can learn a lot from his approach when it comes to your investments. I like to call it the "Mount Vernon Strategy" -- balance, patience and diversification.


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