Skip to main content

Diversifying Beyond Investing

A best practice in portfolio management is to own many companies across many sectors, countries and sizes. Reducing the risk of one bad apple spoiling it all. Diversification, the only free lunch in investing, produces better returns with lower risks. 

Diversification is helpful beyond investing. 

Retirement is a trying time. This is most clear with pro athletes. Countless examples of downward spirals and overnight bankruptcies. We're just as susceptible. Many retirees report depression and anxiety due to loss of identity and structure. So much of us is tied to our careers, when it ends, it's devastating. 

This is why we diversify. We're more than our jobs. We are sons, daughters, parents, athletes, book nerds, investors, gamers, and so much more. Work is a single slice of a much bigger pie. It's foolish to save our best self for one and neglect the rest. 

When we feed other areas, we become more resilient. A bad meeting doesn't destroy us because we were still able to get a good work out in, and be there for a friend. Expanding ourselves makes it easier to accept any single blow. A concentrated life leaves us vulnerable...and dull. 

Leaning into non-work areas counterintuitively makes us better at work. Skills and confidence gained elsewhere can fuel us everywhere. Positives from one area lifts you to new heights in others.  

Just like in investing, diversification limits our downside, while improving our upside. It's a free lunch, eat up.


Popular posts from this blog

The Art of Giving Feedback

Constructive feedback is an awkward affair. You don't want hurt feelings, but recognize the importance of honesty. You've tried the classic "hoping things will get better on its own" and unfortunately it hasn't played out. When giving feedback, here are a few things that I try to keep it mind. Start with empathy. Step into their shoes and understand their story. If you don't know, ask. Be genuinely curious. Feedback is a dynamic affair. Shared communication with a shared goal towards progress. Take the emotion out of it. Focus on the situation, not the person. Focusing on the person adds unnecessary weight to an already emotionally-bloated event.  Be specific. Give clear examples. Vague feedback equals dismissed feedback.  Doing above won't de-awkward things fully, but it will dampen it and increase the chance of better outcomes. 

Bias For Clarity

Bias for action. Gets things done. Go-getter. Traits companies big and small look for. And for good reason, you're being hired to do things! However, action is a secondary step that often overshadows the primary step, direction.   Clear direction is the foundation that enables our actions to takeoff. Without it, we're stuck in the mud.  Striving for clarity is an underrated skill. Having the courage to ask ( seemingly ) obvious questions, and to check in, making sure we're all on the same page. "O bvious " questions are a low risk, high reward way to add value. At worst, you'll add confidence to our actions. At best, you discover a misalignment that saves us from a dead-end.  The more people, the more clear we need to be. The bigger the initiative, the bigger the risk of reaching the finish line, only to realize expectations were off.  Success is always uncertain. But we can be certain about what we want and what everyone's job is. Things that can be clea

Negative Feedback, Positive Lessons

In the battle against plastic bags, a five-cent tax was shown to be much more successful at deterring usage than a five-cent credit for bringing your own bags. Carrots satisfy but sticks sting, and they sting hard. So we default to the less painful choice of avoiding loss. Loss aversion impacts the way we process information. A 2019 study  invited participants to learn through a series of multiple choice questions. Each question only had two options to choose from. Whether guessing correctly or not, they would still learn the right answer.  Despite the identical learning opportunity, participants were much more successful at recalling the answers they guessed correctly than those they got wrong.  "You're right!" feels good. We savour the moment, analyzing every detail.  "You're wrong!" stings. We want to quickly forget, dismiss, and move on.  When we succumb to loss aversion, we miss opportunities to learn. Failure is part of the process. We'll experie