{"id":165946,"date":"2024-02-05T13:47:42","date_gmt":"2024-02-05T20:47:42","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=165946"},"modified":"2024-02-28T09:47:33","modified_gmt":"2024-02-28T16:47:33","slug":"warren-buffett-is-wrong-diversification-is-not-just-for-ignorant-investors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/warren-buffett-is-wrong-diversification-is-not-just-for-ignorant-investors","title":{"rendered":"Warren Buffett Is Wrong: Diversification Isn\u2019t Just for Ignorant Investors"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC9287737262\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Should you aim for diversification in your real estate investments? What about your stock investments?<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Oddly enough, many real estate investors never bother to ask that question. They just assume that all real estate investments require a lot of money and that each niche requires so much skill that you can only master one.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">They\u2019re wrong on both counts, and it adds risk to their investment portfolio.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Warren Buffett\u2019s Take<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Berkshire Hathaway CEO Warren Buffett<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investopedia.com\/ask\/answers\/031115\/what-did-warren-buffett-mean-when-he-said-diversification-protection-against-ignorance-it-makes.asp\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">&nbsp;famously said<\/span><\/a><span data-preserver-spaces=\"true\">, &#8220;We think diversification is\u2014as practiced generally\u2014makes very little sense for anyone that knows what they\u2019re doing&#8230;it is a protection against ignorance.&#8221;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I disagree.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Don\u2019t get me wrong: I have nothing but respect for the Oracle of Omaha. He\u2019s built an incredible career out of choosing stocks and other investments.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But guess what? You\u2019re not the near-prescient investment analyst that Warren Buffett is, and neither am I. Most of us can\u2019t pick winners with the consistency that he can.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">That goes for professional investment managers, too, not just part-time or retail investors. It\u2019s why actively managed mutual funds historically&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.morningstar.com\/etfs\/active-funds-continue-fall-short-their-passive-peers\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">perform worse than passively managed ETFs<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And don\u2019t tell me about how different&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-vs-stocks-performance\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">real estate investing is from stock investing<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;or how the same principles don\u2019t apply to you. Most novice real estate investors lose thousands of dollars on their first few deals. It\u2019s tuition to learn the ropes. Even after getting some expertise under your belt, real estate investors still end up making costly mistakes sometimes, or have market conditions fall out beneath their feet.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Real Estate Lends Itself to Narrow and Deep<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Real estate is expensive. If you buy a property by yourself, you\u2019ll likely need $50,000 to $100,000 between the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">down payment<\/span><\/a><span data-preserver-spaces=\"true\">,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/glossary\/closing-costs\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">closing costs<\/span><\/a><span data-preserver-spaces=\"true\">, cash reserves, and possibly the initial repair costs. And if you invest passively in real estate&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/ultimate-guide-to-real-estate-syndication\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">syndications<\/span><\/a><span data-preserver-spaces=\"true\">, you usually need a similar amount for the minimum investment. That makes it hard to diversify when each individual asset requires so much capital.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Likewise, active real estate investing requires niche expertise. If you invest in Section 8 properties, mobile home parks, self-storage facilities, or in any other niche for that matter, you need to master the skills and knowledge required to succeed in that niche. That, too, makes it hard to diversify\u2014you can\u2019t just learn a new niche overnight and expect success buying up luxury retail properties in primary markets.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Andrew Helling of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/hellinghomes.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Helling Homebuyers<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;sums up the consensus argument:&nbsp;<\/span><\/p>\n\n\n\n<p><em><span data-preserver-spaces=\"true\">\u201cDiversification limits your ability to understand specific market niches and often causes you to miss out on opportunities that come with a concentrated investment strategy. While it&#8217;s riskier, I prefer to go all-in on local deals that I really understand. These are easier to manage, quicker to visit, and require less work, since I know the local market very well.&#8221;&nbsp;<\/span><\/em><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">You can see why real estate investors typically opt for a handful of similar properties in a few markets. In other words: narrow and deep, as opposed to wide and shallow.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Contrarian Take: Why I Go Wide and Shallow<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Markets are unpredictable, and my crystal ball is no clearer than anyone else\u2019s. In fact, every time I\u2019ve tried to get clever with investments, the universe has served me up a big slice of humble pie.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I\u2019ve seen real estate deals go south after all the numbers on paper looked great. I\u2019ve seen syndicators fall apart after many people I respect recommended I invest with them. And I\u2019ve seen white-hot housing markets&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/analyzing-the-multifamily-meltdown\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">collapse in value<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;after nothing but positive buzz from pundits and investors alike.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">So, I invest $5,000 in a new passive real estate investment every month as one of hundreds of members of SparkRental\u2019s Co-Investing Club. In the last year, I\u2019ve invested in multifamily properties, mobile home parks, retail, storage, industrial, and more\u2014all with different syndicators and investors in different markets across the U.S. Most of the deals we review each month are real estate syndications, but some are funds or notes.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cSpreading investments amongst various property types can protect your return when certain sectors retract or underperform,\u201d explains Ryan Martinson of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"http:\/\/whatsmypayment.com\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">WhatsMyPayment.com<\/span><\/a><span data-preserver-spaces=\"true\">. \u201cWhen a particular segment booms, diverse investors participate in the upside.\u201d<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Risk Mitigation Strategies<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Specifically, my diversification strategy protects me from risk in the following ways.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Markets<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">You might scoff now, but in 2006, big real estate players from New York and Washington, D.C., were plowing huge amounts of money into Baltimore real estate. The city had a renewed sense of optimism at the time, with crime rates slowly but steadily decreasing and lots of money pouring into low-income neighborhoods.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As a Baltimore native and a na\u00efve young real estate investor, I, too, jumped on the bandwagon. Then I got my butt handed to me in 2008.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">All that outside money disappeared virtually overnight. Up-and-coming neighborhoods slipped back into decay. And a few years later, in the wake of riots, crime rates increased again.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The details differ as you look at other real estate markets around the country, but the lesson is the same: Sometimes, markets reverse course unexpectedly. I lived in San Francisco briefly in 2009 and loved it (even if it already flashed warning signs for sociopolitical issues by then). Everyone speculated on San Francisco properties for two decades\u2014only to see values crumble over the last few years.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Austin, Texas, and Boise, Idaho, were white-hot a few years ago and then had a terrible 2023. In the \u201890s and \u201800s, people had written off&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/are-the-rust-belt-and-northeast-the-new-south-for-real-estate-investment\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Rust Belt cities in the Midwest<\/span><\/a><span data-preserver-spaces=\"true\">, only to have them resurge later.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The bottom line: You can\u2019t always predict where a market will turn next. So don\u2019t put all your eggs in one basket.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Property types<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">After the Great Recession, everyone said self-storage was the ultimate risk-free real estate investment. In a recession, people downsize and need storage, right?<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Until you overbuild them and the fundamentals of supply and demand catch up with you.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As an aside, it actually turns out that while self-storage isn\u2019t very correlated with home prices or unemployment, it is heavily correlated with home sale volume. People rent storage units when they move, and in the near-record-low transaction volume of the last year, storage has suffered.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Again, I can\u2019t predict what will happen in a specific industry or for a specific property type. To be frank, I actually just recently learned about how dependent storage is on home sale volume. But it goes to show you that even the big Wall Street institutional funds, which have poured money into storage over the past few years, often get it wrong.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And if they often get it wrong, you better believe you will sometimes, too, and probably more often.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">General partners\/syndicators<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">When we first launched our Co-Investing Club, I asked a lot of experienced real estate investors, both active and passive, about the sponsors (syndicators) they recommended. I heard a lot of names, but two names kept coming up again and again. These two big names had an immaculate reputation and plenty of experience and deal volume.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Guess what? They\u2019ve been by far the two worst-performing syndicators we invested with in our investment club. In fact, they\u2019re the only two that have given me any cause for concern.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">You can look at an investor\u2019s track record and ask others in the industry about them. But you just can\u2019t predict how a general partner will perform when market conditions change. And spoiler alert: They always change sooner or later.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Today, the rule of thumb we try to follow in the Co-Investing Club is a one-year \u201cprobation period\u201d after our first investment with a sponsor. We want to see how well they communicate, how they handle hiccups, whether they start distributions on time, and so on. We don\u2019t mind investing again with a sponsor we know, like, and trust, but we try to space them out because diversification spreads out risk.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The wisdom of crowds<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">I\u2019m no longer so arrogant as to think that I can spot winners every time or even most times. This means I rely on the wisdom of thousands of other investors.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Before investing with a new sponsor, I ask about other passive investors\u2019 experiences with them on the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.leftfieldinvestors.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Left Field Investors<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;or&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/forums\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">BiggerPockets forums<\/span><\/a><span data-preserver-spaces=\"true\">. Then my cofounder from SparkRental and I get on a \u201cpre-screening\u201d call with them. If we still feel good about them, we invite them in front of our Co-Investing Club so we can all grill them together.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Every time we vet a deal from a sponsor, we collectively ask better questions. We focus more on risk and how many ways the sponsor is mitigating it than on the potential returns.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In one deal, a member happened to live five minutes away from the apartment complex in question. She gave us a local perspective on the neighborhood and the demand for this type of housing there.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In another deal, a member who works in the insurance industry pointed out just how badly the sponsor had underestimated insurance costs.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Lean on others as you diversify. Through group investments with others, I get to benefit from their expertise, not just my own.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Dollar-Cost Averaging vs. Timing the Market<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">I practice&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/dollar-cost-average-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">dollar-cost averaging<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in both my stock investments and my real estate investments. Every week, my roboadvisor pulls money out of my checking account to invest in a broad portfolio of ETFs. And every month, I invest $5,000 in a new passive real estate deal.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I don\u2019t have to worry about timing the market. When other investors ask me if now is a good time to invest, I basically reply that they\u2019re asking the wrong question.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I can\u2019t predict the stock market or the real estate market. Either could collapse tomorrow or shoot for the stars. But by continuing to invest month in and month out, I make sure I maximize my time in the market rather than timing the market.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Plus, I enjoy cash flow in the meantime, rather than sitting with a ton of cash on the sidelines waiting around for a dip that may take years to appear.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">A Numbers Game and The Law of Averages<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Last year, our investment club invested in 13 deals, in line with our goal of around one a month. One or two of these investments will likely underperform or lose money. Others will overperform and exceed expectations (some already are). Most will fall in a bell curve in between and average out to strong annualized returns in the long term.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">At the end of the year, I didn\u2019t wring my hands and worry about how this or that deal was doing. They just added up to numbers on a page, all averaging each other out.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But if I had invested all of my funds in a single property or deal, you better believe I\u2019d be thinking about that one deal all the time\u2014especially if it was losing money or underperforming.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cBy abiding by the law of averages, investors are typically able to lower the risk of downturns in fluctuating markets,\u201d explains Nate Johnson of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.neighborwho.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">NeighborWho<\/span><\/a><span data-preserver-spaces=\"true\">. \u201cInstead of an \u2018all or nothing\u2019 approach, diversifying helps give investors a financial safety net while helping to ensure a consistent trajectory towards financial growth.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And hey, even Warren Buffett can\u2019t pick winners every time. For all his talk about how diversification is for investors who don\u2019t know any better, Berkshire Hathaway owns stakes in over 60 businesses.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">By spreading smaller amounts across many property types, in many markets, with many syndicators, I can sleep at night knowing that the law of averages will protect me. Call me an ignorant investor if you like, but I feel pretty good about a bell curve of returns on my many investments.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_99a0a5683001daaf59fb27637fd57fea\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_89ea1771c36fd370fa8834482ccde3f8\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_6a1678f6f72ccbbab676189165f2e793 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/warren-buffett-is-wrong-diversification-is-not-just-for-ignorant-investors&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/warren-buffett-is-wrong-diversification-is-not-just-for-ignorant-investors&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The so-called Oracle of Omaha said that diversification is protection against ignorance, but isn&#8217;t this strategy a necessary part of intelligent investing? Here&#8217;s why diversification, especially in real estate, is so essential.<\/p>\n","protected":false},"author":158586,"featured_media":165948,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4433,7119,7399],"tags":[],"class_list":["post-165946","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","category-biggerpockets-daily","category-diversifying-investments"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=165946"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165946\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/165948"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=165946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=165946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=165946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}