“There were no outlets in my life. I hadn’t diversified my portfolio; I had no hobbies, interests, activities, or people to share my life with. I had no idea the impact this would ultimately have on my health and well-being… When you invest all your money into a single stock, you’re at the mercy of the ups and downs of a lone investment. So it was with my whole life: I lived and suffered by the ups and downs of my business.”p. 55, “From Doctor to Patient”
Would you invest your life savings in a single stock? Probably not. Every piece of investment advice you’ve ever received included the word “diversify” at least once, right? Although this may seem like common sense to some, let’s break down the underlying principles of diversification.
Finance 101: The Principle of Diversification
In 1952, Harry Markowitz published a paper about “Modern Portfolio Theory” in the Journal of Finance, for which he was later awarded the Nobel prize. Markowitz’s Modern Portfolio Theory emphasized the importance of constructing a portfolio full of a variety of different stocks – commonly known as diversification. Even if the performance of one stock in a portfolio suffers, there are plenty of other stocks in the portfolio that can perform better to reduce the loss and risk of any one unsuccessful stock. Modern Portfolio Theory suggests investors look at a portfolio as a whole, rather than the success of any single stock.
The Life Metaphor of Diversification
Now, I challenge you to go back and re-read that brief finance lesson, but this time think about the following metaphor: an investment portfolio is your life and/or your identity, and a single stock is an activity or hobby in your life. In fact, you can simply substitute the word “life” for each mention of “portfolio,” and the word “activity” for each use of “stock.” After doing so, we have a newly minted Modern Life Theory, which can be described as follows:
- Emphasizes the importance of constructing a life full of a variety of different activities
- Even if performance in one activity suffers, there are plenty of other activities to reduce the loss and risk of any one unsuccessfulactivity
- Look at life as a whole, rather than the success of any single activity
In this metaphor, your life and your identity are defined by the activities you spend your time on. Your activities may include work, exercise, or socializing. When you look at it this way, your identity and sense of self are strongly tied to the way you spend your time. If you spend all your time on work, and get laid off, your entire sense of self will be destroyed. Likewise, if you devote your entire life to lifting weights, and you develop a debilitating health condition, how will you maintain a sense of self-worth? You can reduce these risks by diversifying your life.
How to Diversify Your Life
Some things are easier said than done – creating new habits can be really tough! Change is very uncomfortable after all. Luckily, diversifying your life doesn’t have to include momentous changes in order to be impactful. For example, if you only read things relating to work or school, try diversifying what you read – mystery novels, poetry, self-help books, even a magazine will do! You can also try a number of new activities: painting, running, gardening, yoga, blogging, etc. It’s even better if these new activities introduce you to new people. Building a strong support network of friends and family will encourage you to maintain balance in your life. No matter which avenue(s) you choose, diversifying your life will help you live a more fulfilling, enjoyable life.
Dr. Nagula, a physician and entrepreneur, learned the hard way about the importance of diversification. Constantly stressed and living a very unbalanced lifestyle, Dr. Nagula neglected his body to the point of no return. He was diagnosed with stage 4 non-Hodgkins lymphoma, and his identity went from that of a doctor to that of a cancer patient in a matter of seconds. Learn about Dr. Nagula’s journey through cancer and self-discovery, as well as how he decided to diversify his life, in his new book “From Doctor to Patient” here: https://www.amazon.com/Doctor-Patient-Healing-Cancer-through-ebook/dp/B081PG4P87