Diversification

negative price correlation to stocks and bonds

To provide true diversification, an investor must have a portfolio that contains investments with negative price correlation.  That is, when the price of one falls, the other rises.  Farmland is one of the few assets that have a negative price correlation with stocks and bonds.  Over the years, the low in price of one has been offset by the high in price of the other.  Assembling a portfolio of negatively correlated assets is the only way to achieve true diversification.  An investor may have a thousand different investments but if they have a positive price correlation, there will be no true diversification and reduction of risk.