The New Science of Diversification

There have been numerous articles in recent months saying diversification doesn't work and others reassuring investors that, yes, diversification still works.

As with many debates, the answer might be in the middle. Investors may need to come to grips with the idea that they still need to diversify, but there is an evolution both in the science of portfolio construction and the management of a diversified portfolio in stock-market cycles.

Tying the concepts I've been writing about for several years along with work done by others including RealMoney contributor Mebane Faber, we can explore how to account for the continued need to get a return on savings and acknowledge that buying and holding all the way down through a bear market is not comfortable for many people. ...