Sam Tabar’s Warning: Diversify Wisely or Perish

Manhattan attorney Sam Tabar recently released his guidance to investors who are seeking build up their portfolio this year.

Naturally, he advises us to diversify, but not all diversity is equal.

Consider Commodities with Caution

Commodities have made quite a few people rich since 2001. The stock market and housing crashes of the Bush Presidency led many to triple their money, then the uncertainty of the Obama Presidency led holdings of gold and silver to double from there.

Knowing this, it would seem that commodities can make for a rich portfolio, but look at the volatility. An ounce of gold went up nearly 600% in about 14 years. Then, when the economy was doing well and home values rebounded, it dropped by a third.

Precious metals can be a small part of a portfolio, but solid mutual funds with 70+ year track records should make up more than half.

Invest in Private Businesses

If you know about a specific industry very well, there is serious money to be made. This could include seed money for a start-up, as had been provided to Amazon, Twitter, and many others. Or it could be a needed influx of capital for an established company.

Not only can good returns be made, but this investment can also save or create local jobs.

Diversify for Safety

As stated earlier, a diverse portfolio is a safe one, but only if it actually is safe. After all, a portfolio with rental properties, stocks, and bonds would appear diverse, but what if all of the holdings are located in Los Angeles? Well, so long as the city remains thriving, all will be well. But if a great flood strikes the same day as an earthquake, the sinking tide may ground all vessels.

For this reason, many professionals like Sam Tabar are guiding their clients to follow the lead of investors like Christopher Pascale. Mr. Pascale has a Roth IRA that is solely in blue chip mutual funds. He also has a private stock account that is only invested in marijuana-based small cap companies. He has real estate in North Carolina and New York. Lastly, he owns the intellectual property to his artwork, which includes the book War Poems: A Marine’s Tour 2003-2008, as well as royalties on work he has ghostwritten.

The result one can find by following the guidance of Sam Tabar, and the example noted above, is a solid base of growing assets, as well as strong cash flow from dividends, rent, and royalties.

Remember: It’s not enough to diversify. One must diversify wisely.