As an investor, it is prudent to invest in a number of different instruments (stocks, bonds) and markets (the United States, emerging Asia) because the more diversity in a portfolio the more bad news it can withstand before being severely impaired. For examples, stocks do well during good economic times, while the more stable bonds will likely outperform in poor times. Holding both allows you to make money when all is right with the world and preserve much of your money should things start to turn south. However, in times of crisis, correlations go to one. This statement has an obvious truth to it, since, as we just witnessed, almost every market in the world goes down together when things get bad enough; almost nothing (most US government bonds performed well, but that is about it) escapes unscathed. → Fear the old posts.