I've been thinking recently what can I do to reduce risk on my long-term buy-and-hold portfolio. When I say "risk", I'm talking about rare, unexpected but highly destructive events (think Taleb's Black Swans) - wars, global crises, political upheavals &c. &c.
My portfolio is diversfied on the following layers:
- Type: equities, bonds, REITs, cash, treasury bills and metallic gold
- Risk / return: S&P 500, developed markets, emerging markets, small-caps, gov't bonds, bank deposits
- Geography: USA, Europe, Asia
Physical location of assets: Two countries in Europe and Russia (will probably open a new account somewhere else) - see also this question: Where are my US/UK equities stored?
Banks and brokers: two separate brokers; cash in a large int'l bank; gov't treasury (will open a new brokerage account for foreign stocks and a local bank account for higher interest rate deposits)
As you can see, I'm quite well diversfied, but maybe I'm not doing enough or there's something that I might have missed. Tangible real estate? Land? Or something else that I haven't even thought about?
UPDATE I'm considering adding index options into my portfolio. The idea is to buy them cheap, deeply OTM (out-of-the-money) as a sort of insurance against huge market downfall.
