Over and over you will hear investing guru's tout the need to diversify. It's one of the most common teachings in the industry. If you are a long term investor and you diversify over many different products then statistically you put yourself in the best possible position.

If the educator is better than average they will also offer the tip that you should diversify by non-correlated products as well. This advice is designed to help you avoid the mistake of narrow diversification. You may think that diversifying in many different tech stocks is diversified, but really you are just diversified in the tech sector alone. Having some stocks, some gold, some bonds, this is an example of diversifying in non-correlated products.

But what if we took it a step further and diversified our strategy as well. What would that mean and what type of an effect would that potentially have on a long term portfolio. Well first let's explain what we are talking about.

Most long term investors simply look to buy what they believe are sound investments for the long term. This could be companies that they are familiar with, or names that pay a nice dividend. Regardless, many investors simply look to buy and hold for the long run. If you are diversified among non-correlated products then you are more than likely just fine and can continue to hold. But what if we added a strategy or two to our portfolio. Now we could diversify across all asset classes, but also have different goals inside of our long term view.

One simple way to do this is to utilize the covered call. Maybe you save your higher dividend paying stocks for the long run and leave those alone. But if you have other stocks or etf's that you hold as well, consider selling covered calls on some of them. Now you will have a buy and hold strategy for some stocks, and another strategy that could generate income on the others.

Another strategy you could use is a time frame strategy. Some of your investments can be in the short term. Now, were not talking about day trading here, but maybe you feel that gold will be higher by summer next year. There is nothing wrong with having a short term view on that. 

As you can see, at this point you would have some buy and hold for a dividend, some income generating holdings, and some short term holdings to keep things exciting. Keep in mind that we still are suggesting that these are all diversified by product, now we just add another layer by diversifying our strategy as well.