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Wall Street would have you believe that the most effective way to hedge against unknown market risk is to diversify your portfolio.
The theory is pretty elegant – or at least it's supposed to be.
Spread your money around, they say, and you'll reduce your risk because "everything can't possibly go down at once."
Problem is, that's a load of self-serving hooey.
Today's markets are more correlated than they've ever been, thanks to a witches' brew of computerized trading, exchange-traded funds, and leverage.