Most investors, almost all 401K owners, and the vast majority of professional financial advisors will likely agree that diversifying your investment portfolio across asset classes is the key to long-term success. While history will likely bear out the validity of this thesis, here’s a news flash: Diversification is not working worth a darn this year!

That’s right, anyone who has been told by their professional advisors that they simply must own stocks, bonds, real estate, commodities, gold, and foreign markets, etc. has actually received pretty bad advice in 2013. (It was also very bad advice in 2008, but that’s a horse of a different color.) You see, the stuff that so many investment pros were afraid of coming into 2013 has done quite well this year while the areas that are supposed to smooth out an investor’s ride have basically stunk up the joint.

Given that the S&P 500 is up more than 18% on the year, you couldn’t be blamed if you thought that most investors are happy with their results thus far in 2013. But in reality, nothing could be farther from the truth as a great many have missed out on the stock market’s run and have taken a beating in what is turning out to be a brutal bond market.

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