Our weekly newsletter is out, and this time we’re taking a look at the long-term risks and benefits of diversification. Unfortunately, it’s not always fun to do the responsible thing. People who pay their insurance premiums year after year may get a little envious when their neighbors spend that money on a new boat. Students who diligently crack open their textbooks on the weekends may pine for the kind of adventures that their less studious classmates are enjoying. And investors who have done the responsible thing and diversified may find themselves gazing longingly at the returns they could be getting if they had only stayed in stocks.

In the long run, the responsible choice is most likely to provide the best outcome and protect you from potentially catastrophic losses – a storm that sweeps away your home, failing your classes and being expelled, or watching a market collapse wipe away your nest egg. But that expectation of future benefits doesn’t make it any easier to ignore the feeling that you’re missing out. And unfortunately for those who have diversified their investments away from a traditional portfolio, the last few years have been tough to watch.

60/40 Portfolio = 60% Stocks (S&P 500) + 40% Bonds (Barclays Capital Long-Term Treasury Index). 42/28/30 Portfolio = 42% Stocks (S&P 500) + 28% Bonds (Barclays Capital Long-Term Treasury Index + 30% Managed Futures (Dow Jones Credit Suisse Managed Futures Index). Disclaimer: past performance is not necessarily indicative of future results. The above index results are for illsutrative purposes only and do not reflect actual investment gains or losses.

Naturally, this got us to thinking – how long would the current rally need to last before the investor without any managed futures exposure would make enough money to overcome the additional losses he/she would incur in the next selloff by not being diversified? Click through to see what we found.