This chart captures three stocks and the S&P 500 (as measured by SPY). I removed the other tickers as that is not the point; SPY is in yellow.

The blue line is a growthy stock a bought at the start of the chart (early October), the red line is the one REIT I own across the board and the green line is one of two foreign mining stocks in my ownership universe. The blue line shows up 20%, the red line down 15% and the green line with a wild ride to being down less than 1% in a down 4 plus percent environment for the S&P 500.

One reason for the timing of buying the blue line stock was as a counter strategy to my bearish sentiment--that is if the market rallied I figured this would help me to better keep up.

Going into a period where the market was going to drop 4% in two months I might think the REIT would hold up better than the growthy, albeit with a long term theme I believe in, stock.

The REIT obviously came apart like most REITs due to the financial event we are still working through. Take these three as a microcosm for how a properly diversified portfolio can work. The three are from disparate sectors and make an important point. Leadership will come from somewhere. You may be right or wrong about where leadership comes from but you will have the exposure if you are diversified, meaning you don't have to be right to have a good result.

These are all individual stocks. The stock that is up a lot is ahead of the corresponding narrow themed ETF, the REIT is down more than iShares DJ REIT (IYR) and the mining stock is about even with the iShares Global Materials ETF (MXI), I own MXI for a few accounts. So more risk and more reward with stocks, no shock, than with ETFs but interestingly enough the net result seems to be about the same.

Taking the path of least resistance is important in life and portfolio construction.

One last item, I think this week's video will be interesting. I am going to take a stab at recapping some of the meatier portfolio construction concepts discussed at the Super Bowl of Indexing I attended earlier this week.