And through a fund of funds, a common hedging vehicle, investors can diversify among several hedges for only one minimum.

So essentially it allows investors to further diversify their portfolio.

This risk, which remains even after an investor diversifies, depends on how much an individual stock is dragged up or down by the market as a whole.

And because of the risk involved with new issues, investors should diversify among several new offerings rather than betting on just one.

These funds permit investors to diversify among various sectors.

Having all your eggs in one basket is quite risky, and prudent investors diversify as soon as it makes economic sense.

Mr. Goldberg said that because of the difficulty in analyzing partnerships, investors should diversify their holdings and seek professional management.

In this way, an investor can buy at low cost and diversify just as the world economy is diversifying.

Since market neutral long-short returns often move in a different direction from the overall market, it can help investors to diversify their portfolios.

"In recent weeks, it has become accepted wisdom that investors should diversify out of the oil and resources sector," Mr. Kraus said.