Experts will tell you that your portfolio needs to be broadly diversified. In practice, this means that your retirement portfolio needs to be composed of more than just Apple stock and U.S. Treasury bonds. You need to be invested in index funds, both for stocks and bonds. Maybe throw a little real estate in there as well. Why? It helps to spread out your risk. Single stocks can become worthless, but the entire stock market? Not as likely. In my opinion, there is no better chart out there that supports the idea of diversification than the one below. There are different versions of this chart on the web, but this one was created by Callan, an employee-owned investment consulting firm based in San Francisco. Along the horizontal axis, you’ll find each year dating back to 2000. Within each column or year, the performances of different assets are ranked top to bottom. Nine different asset classes are represented here: three different types of bonds (U.S., international, and high yield), four different types of stocks (small cap, large cap, emerging market, and international), real estate, and cash. As you can easily see, the rankings are highly variable from year to year. So variable, in fact, that it would take an extremely lucky person to predict the winners from year to year. That’s why picking and choosing individual investments is such a foolish thing to do—no one can time the market every year!