If you have invested for the long term anytime over the last 9 years then you have been handsomely rewarded. This market, moving higher and higher will certainly be one for the history books. Almost any investment has appreciated in value, and many have appreciated well over double digits this year alone. It is at this point that many investors are starting to get a little concerned that they need to be diversified in case there is a down year, or an end to this impressive rally. While diversifying is the traditional way to spread out risk, you will want to diversify your strategy as well.

When we diversify a portfolio we tend to spread our assets over many different areas of the market. This in no way guarantees that you will avoid risk however. It is a bet that one area of the market may continue to do well while others suffer. By spreading out your portfolio you get the opportunity to participate in the good areas, which will help offset declines from any bad areas. While this is a perfectly fine way for a long term investor to approach his capital, what if we also diversified by strategy as well?

At some point you have had a strategy in mind for each of your investments. You may be reading this and saying that you just want to invest and see gains. If so, then that is your strategy. I am suggesting you include other strategies. For instance, maybe a small portion of your portfolio is dedicated for the mid term. You may have the impression that Oil will be higher next year. WHile the rest of your investments are riding along for the long term, you have a different strategy on oil.

Another great way to diversify by strategy is to include some income. One way to do this is the use of dividend stocks, or ETF's. You could also use options as a source of income. Maybe some of your positions have gained in value tremendously and rather than leave them there, you decide to sell calls against them.

I am not suggesting that the long term investor suddenly become the active investor, but diversifying your overall strategy, along with diversifying your portfolio may help reduce your risk should the markets ever fall again.