Your seven asset classes are diversification, but its diversification that is just as dangerous as if you invested in only one of those assets. Why? because what you have there simply wont protect you from a market crash. I know that financial planners will tell you that nothing can protect you from that, but they are completely wrong. Assuming the american economy went to pot, which is obviously what you would be hedging against by diversifying. Everything your investing in there would be taken out except for the commodities and possibly the foreign stocks. But your stocks would only survive assuming you invested in Chinese stocks or some other country that would directly benefit from a bad american economy (so not ANY Western European Nation. because their currencies are pegged to the dollar). Further, unless you invested in a few specific commodities, their prices would only rise in relation to the dollar, but might actually fall in prices relative to other economies. Unless of course you invested in a commodity that would be driven up BECAUSE of a market crash. And there are only 3 potential candidates guaranteed for such a position. Gold and Silver, because they are investments people turn to in times of widespread panic. And oil, because if america nosedived the rest of the world would probably stop trading in dollars for their oil. The only drawback is that there would probably be several competing currencies which might possibly drive the price of oil down a bit (not for America, but for those individual currencies. If the dollar ceases to be the currency in which the world trades oil, our oil prices will likely go above $10/barrel, assuming we dont go into hyperinflation, because then it would just grow to some astronomically rediculous number)

Here would be true diversification for this economic climate

1. Whatever your normal investments for a good economy would be. Because there is no guarantee that a crash will come in the near future (its about as likely as the sky being blue tomorrow, but its not 100% certain) Could be anything from real estate to stocks, but definitly NOT government bonds because even in the best of situations those will be going down until the world begins to trust America again. at which point you should buy. A good sign for that would be America eliminating the Federal Deficit and beginning to seriously pay down thei national debt. If the Tea Partiers win over teh senate in 2012 and someone like Donald Trump or Mitt Romney wins the presidency it might be a very good idea to buy bonds. But it would still be a big

gamble.

2. Gold, Silver or Oil. You say, but every “professional” is advising against that right now and thinks

Gold is in a bubble. Yeah, thats because neither them, nor their advertisers which are mostly mutual funds,

can make money off of you if you invest in Gold because the best way to buy that is directly from the

seller, without a broker or middle man (like them and their investors). Also, you will be the one

physically holding your investment and deciding when you sell, whereas, with mutual funds, THEY hold them

FOR you and THEY decide when you sell because they are the “professionals” (i might add the same

professionals that were advising you to invest in Bear Stearns until ONE DAY BEFORE IT CRASHED. and not

because they didnt know it was gonna crash. Because they DID know and they had to give their advertisers

CEOs time to get their personal investments OUT of the parts of the market that would crash before it

crashed (which is done by making the public at large believe its still a good investment, ie, through

telling you that it will keep going up when they KNOW it will crash.((talk about insider trading!!))) If

your gonna invest in Gold Oil or Silver youd invest, preferably in Silver or Oil. Because Gold is a panic

investment (it ONLY goes up in troubling times) and is thus more volatile especially considering the

possibility of the Government making Gold ownership illegal again. Its also has virtually no real life

applications so 95% of the gold ever mined is still in circulation. Its also much more expensive than

silver, and because one ounce of it is more expensive, your potential for exponential increases in your

wealth with it is lower because you would own less base units of it. However, its still a better investment

RIGHT NOW than ANY stock. Silver is also a panic investment, sort of, but it actually has real world

application, which means that even in a good market its price will generally rise, unless demand for it gets

so high that production increases, in which case its price would decrease. Its also great because it cannot

be directly mined for, but must be gotten as a side product of other mining operations. (if you invest id

recommend waiting until it resumes its historically consistent price of 1/16th the price of gold, which

would be, at current market price, about $80 an ounce (over 3 times the current market value). It may go

even higher assuming the american economy tanks. But if the economy doesnt tank its almost a shoe in to go

up to at least 80. and it wont fall because the demand for it in technological applications is only

increasing, and only 5% of the silver ever mined in the world is still unused. There are also no mines

producing it in LARGE quantities right now and it would take DECADES to scale up production to the point

where the price would begin dropping. Oil will obviously always go up as long as OPEC is around. Finally,

investing in commodities does not mean investing in paper stocks of commodities, as are sold by the same

brokers that give you, nor does it mean investing in those collectors edition gold and silver coins you see

on telivision that are being sold “only for a limited time” because those only have value to a collector,

and have no value as a hard core COMMODITY. What you want to buy is bullion. If it doesnt have the purity

and weight marked on to it. Dont buy it. If you dont know the going price for gold. Dont buy it. There are

a lot of charlatans out there selling junk gold and junk silver.

3. Chinese Stocks – Regardless of what happens to america, or the world economy, china will keep rising, at

least for now. Its the only country that can claim that position. In fact, the only thing that could slow

its growth significantly enough to cause a risk to your investments would be if America put tarrifs on

China, which will only happen if someone like Donald Trump or Mitt Romney get elected. So if they do. Get

out, immediatly. But assuming Obama stays in office, your golden. Even so. You would have to know WHAT you

are investing in, because individual stocks and businesses will still fluctuate in the chinese market as

they do in any market. A mainland based business might be an even better inevstment than a Hong Kong

investment because the financial/political climate there could easily change the more Mainland China begins

to catch up with it. India would be an ok foreign investment too. But not as solid as China. Some people

may say that your hurting the american economy by investing in China, but its not your fault. Its the

Governments fault for enacting policies that make it dangerous to invest in America. You are just being

smart by protecting yourself. Yes, you should be a patriot. But not at the risk of losing all your money

because of someone elses corruption. Id say, invest in China, and go to Tea Party Protests, youll definitly

offset your damage to the american economy by doing your part to help reverse the things that are causing

the poor investment atmoshpere here in America.

4. You dont have to invest in a foregn country to protect yourself though. Invest in stocks of American

companies whose price wont be determined by the American Economy at large because it is too global, or

because it does most of its production overseas AND has a significant portion of its consumer base OUTSIDE

of america, but not necessarily in one other specific nation. Good examples are Google and Coca Cola.

5. Real estate that gives you passive income from rent. It would have to be in a neighborhood where there

will always be more jobs, even in a bad economy, because the demand for your rent then would never go down,

and you could drive the price up more than normal because people NEED to live their for their job. In

America, a great example would be an Oil town. A better example would be owning property in India or Brazil

though that would be difficult due to the distance and you would probably have to speak the language (except

in India where the business language is English)

6. Foreign Currencies – The Yuon is a great investment right now. There are also several newly created

currencies that the Russians and a few other countries are using to buy oil instead of the dollar. Very

good investment, the only problem is getting a hold of some, which is a little more difficult than

exchanging your dollars for euros (euros are an even worse investment than dollars by the way, because a.

its pegged to the dollar, and b. it could fail all on its own, even without another American crash. The

Bancor, if it ever gets printed, could potentially be good. But it could potentially be a terrible

investment as well. Depends on if it is minted as a replacement to the dollar. Or if it comes into print

before a hypothetical dollar crash (when its printed, look at what they peg it to to know if it will be good

or bad) Another great investment right now that is virtually unknown are the alternative currencies

sprining up all over the country, like the Berkshare for example. A great investment because its so EASY to

know when to get out; If the dollar continues dropping and other nations continue in their course of moving

away from being dominated by our currency then stay in. If foreign investors and mega rich businessmen

start investing in our economy again. Sell your alternative currencies and buy, not the dollar (though that

would be ok) but shares of those new job producing companies. Ill make it even eaiser. If the rich people

you know stop quoting Ayn Rand and reading from Atlas Shrugged, its time to reinvest in the american

economy, because that is what they will be doing. (if you dont understand why Atlas Shrugged could have such

an effect on the economy, look it up.) You could also just wait until/if the government repeals all of

their business regulations and lowers the corporate tax rate and repeals obama care, and begins restricting

unions.(at which point, the John Galts of the world would begin investing again instead of attending

seminars on objectivism anyways) Because THOSE regulations and policies are the real reasons there are no

businessmen here, and consequently no jobs. Its not the illegal immigrants fault and its not Chinas fault.

its the politicians fault, on both sides of the aisle. do you realize that we have the highest corporate

tax rate in the world, and that there are more business regulations that restrict companies here than

ANYWHERE ELSE. Even communist China has less regulations on business. That seriously hurts the bottom

line, and its why there are no jobs. Not because of a “bad economy”

7. Your mortgage. Possibly the best investment. Lots of people dont realize. the interest payments they

are making over their lifetimes because of not paying off their mortgages (and other debt too) are by FAR

surpassing any gains they are making in the stock market. ESPECIALLY if they invest heavily in mutual

funds, because the more you invest in mutual funds, the closer to the stock market average your own gains

will be, which barely beats out inflation. not to mention making enough to offset the losses from the

interest on your various types of debt. You would be better off avoiding as much as possible investing at

all, and just pay off your debt. I know lots of people that were always constantly telling me about how

diversified they were before the crash. They completely ignored the things i would say, and even told me i

was an idiot. But I turned out to be right and now those people, with all their mutual funds and large

retirement plans (and large amounts of consumer debt and huge mortgages) have foreclosed on their houses and

lost everything in the stock market, including their retirement. Get out of debt. its a fantastic

investment.

The above investments are good because they are not tied to each other like small and large cap stocks would

be (if the market crashes, they are both sunk!). You will notice that most investments that “professionals”

recommend are investments that are tied to each other because in order to invest in them you would need to

go through a broker. who would that broker be? THEM OR THEIR ADVERTISERS. they dont want to make YOU

money. They want you to make THEM money. Also, each of these investments is pretty much guaranteed to stay

up unless certain specific events happen, and in those cases you could get out before you lost money

(assuming your paying even a remote amount of attention to current events). However, the stock market as a

whole can be completely unpredictable. The more diversified you are, the harder it is to know when to get

out. but thats part of the problem. Most people who diversify dont ever even PLAN on getting out. Their

idea is to ride out the wave. But that doesnt work. Because if you stay in for the long run, your really

taking your money to the casino, hoping that you will retire and die before the next market crash, which is

very unlikely. The best reason that these investments are great is that you can diminish, or even avoid

taxes with them. Which take out a HUGE chunk of your ROI. Investing in foreign countries, if done right,

can be done by legally and completely avoiding the american tax system altogether, which is great because

america is the highest taxed nation in the world. Contrast that to investing the way that most

“professionals” would advise, investing as an amatuer in the stock market by using the money in your 401k

plan to invest will make it so that when you pull that money out of your investment, you will pay income tax

rates on your gains, instead of the tax rates that professionals deal with. In short, the government screws

you for your ignorance.

I believe that diversification is really just a hedge against fear and ignorance. And the bible says that

if you fear, you will cause what you fear to happen. Fear is the antithesis of faith and should not be the

basis for any action, especially something so tied to your personal welfare. However, i believe that

diversification is important. But i believe Solomon was talking about a different type of diversification

than we typically imagine in our modern day. In his day, the only investment was commodities, land, and

animals. There were no other investments. And he is obvioulsy saying that you should keep those

investments, lets say in this case, all of solomons gold. In seven different places, because thieves could

break in and steal ALL your gold if its in the same place. I would recommend the same thing. Lets say you

invest in gold, thats a great example. Put some in a hidden safe in your house, some in a public storage

facility, and some in a foreign storage facility.

Ultimately, the best investment is your own knowledge. The reason that I do so well in my investments is

because i dont HAVE to listen to “professionals” who advise me on investments, but then make all their money

through a PAYCHECK. I invest based on facts. I can almost certainly predict what is going to happen to my

investments, at least, with enough accuracy that i know when to invest, and when to get out or shift into

something else. If your financial advisor cant tell you WHY your particular investment will be going up in

the future, what price you can expect to see it rise to, and when and, most importantly, how to exit your

investment (and the WHY for doing all of those things in that particular way) then hes just telling you

whatever his manager told him to tell you, and its probably advice you should NOT be following, because it

isnt geared to make you money, but to make them money, which frequently means you LOSING money.

Dont know how to increase your own knowledge? Well i dont want to advertise for anyone so ill just say look

for people who advocate increasing your financial knowledge. Those people have a vested interest in telling

you the truth and helping you make more money because if they dont increase your financial knowledge, youll

stop buying their books. (whereas financial planners can just blame it all on the stock market or some other

external factor instead of taking responsibility for their mistakes, also, anyone lying about financial

things stands at a much greater risk the more his customers know about financial things and stand at a

lesser risk when all they know is the misinformation they have been fed by the government/banking/media

complex, because no one will know enough to call them on their BS.)

Be smart, learn the principles that guide world economics and business instead of touting the popular line,

and dont hand your money over to a stranger. Take care of it yourself. There is no magic pill to being

rich. There is only your own personal financial knowledge or lack thereof.

The reason it stuck in my head is these days, so many families in southeast Michigan can look at each of their seven or eight divisions of wealth — and find that all of them have fallen in value. : (

Good advice! But then ANY advice from the Bible is good. Personally, I think Solomon should’ve been awarded the Nobel prize that was given to Harry Markowitz — and Solomon is a LOT easier to understand.

I’ve examined this in I did a post last year.