During the past twelve months, over 6% of this website’s traffic has come from people living in Atlanta, GA or its nearby suburbs. The city of Atlanta holds its own against the other heavyweight generators of this site’s traffic—like the entire states of Texas, New York, and California (though the number of California residents that read this outnumber the Atlanta residents by a bit). That is not a coincidence: From what I can tell, just about every Atlanta reader that finds his or her way to the site does so by googling something about Coca-Cola as an investment, and I’ve been lucky to have many of you stick around.
If you frequently read articles about personal finance, every columnist, pundit, and article writer will list as abstract advice that you must practice diversification. At some point, though, diversification became such a buzzword that it became devoid of meaning and no longer discussed diligently.
For instance, I view diversification as a sliding scale in which owning diversified cash-generating streams become more important as you age and take on permanent obligations that carry significant fixed costs (kids, mortgage, etc.). Furthermore, the consequences of failure need to be taken into account as well—an eighty year-old woman losing 40% of her net worth is going to have much more significant lifestyle ramifications than a twenty-five year old dealing with the same percentage loss. That’s why I’d react much more differently to a single thirty-something telling me that he has 35% of his wealth in Visa stock compared to a retiree telling me the same thing.