The surge in real estate prices over the past year helped to make up for the losses in stocks. The fund's stock portfolio lost nearly 9 percent last year while the real estate prices rose by 17 percent. For 2000, the entire portfolio was down a modest 1.38 percent. A lot of investors would consider that a great year. Some people might say they are diversified because the own five different tech stocks.
Diversification means investing in different sectors of the stock market and asset categories.
A diversified stock portfolio owns shares in major industry groups including some of the old economy companies like food, energy and manufacturing. Trying to time this market by being overweighted in any one category is a sure way to sabotage your long-term investment plans.