The trouble is that these bonds may not be the best way to achieve diversification from bond allocations in an overall portfolio.

FORBES: Are Your Bond Holdings Raising Your Portfolio's Risk Profile?

Its approach to buy-outs has helped Carlyle raise funds, since the same investor can put more money its way and still get the diversification he wants.

ECONOMIST: The Carlyle Group

Another way to try to maintain better diversification if the market goes haywire is through investing in alternatives, such as managed futures.

FORBES: Using Your Investing Alternatives

Along the way, for tax and supply diversification reasons, Bristol developed its own operation in Ireland to manufacture paclitaxel and then fired Hauser as a supplier.

FORBES: Delaying tactics

If he is right, investors cannot properly judge the merits of international diversification unless they know which way the world economy is heading.

ECONOMIST: All fall down

At the beginning of the bull market, the diversification provided by a fund was a good way of reducing risk.

ECONOMIST: American investing: Feelings are no longer mutual | The

Diversification is a must and you need to stay that way, even when one of your selections is going ballistic.

FORBES: Are You Blinded By Your Love Of Apple?

Third, consultants like Colin Robertson of Hewitt Associates argue that diversification does work when it is applied in a sophisticated way.

ECONOMIST: Spreading the risk has spread the losses

To put this another way, investors have begun asking the question: Do these fancy investments still help with diversification?

FORBES: Don't Abandon These Asset Classes