Many new investors start out with some extra income, curiosity about the markets, and a lot of confidence. It’s not uncommon to make bold moves early on—often gravitating toward well-known companies that seem like safe bets. Years ago, Blockbuster fit that description perfectly. It was a household name, the clear leader in video rentals, and a company that seemed built to last. What could go wrong?

As it turns out—quite a lot. When Netflix changed the way we watch movies – by letting you choose entertainment from home – Blockbuster failed to adapt. The brand that once led an entire industry quickly became obsolete. What seemed like a smart, intuitive investment became a cautionary tale about how quickly markets shift—and how important it is to manage risk through diversification.

The Risk / Return Trade Off

To better understand diversification, it is helpful to start with the risk and return tradeoff.

Blockbuster, as a single stock, would sit in the upper-right quadrant—with the potential for big returns, but also vulnerable to major loss. On the other end of the spectrum would be an investment only in money market funds, which is low risk, but real returns are likely to remain stagnant after accounting for inflation. Diversification helps investors avoid both extremes—overexposure to risk of loss and underexposure to risk that limits the opportunity for real returns.

Crafting a diversified portfolio aligned with your unique circumstances requires personal insight and sophisticated technical expertise.

Personal Considerations

No two investors are the same. Your financial goals, family dynamics, life experiences, risk tolerance, and behavioral tendencies all influence how your portfolio should be structured. Practical factors such as your investment timeline, liquidity needs, and tax situation also play a significant role. A financial advisor can help you work through these considerations to develop an investment plan that fits the unique circumstances of your life situation.

Technical Execution

Once your plan is in place, the detailed work of constructing the portfolio begins. Markets are constantly changing, and strategies that were effective yesterday may no longer apply today. Each decision influences how the portfolio will behave under different market conditions.
Professional portfolio managers strategically diversify risk by allocating investments not only across asset classes—equities, fixed income, alternatives, and cash—but also by spreading risk within each of them, as shown below:

Diversification Within Asset Classes

C. Robin Hanes III, CFP®, is an Investment Counselor at Leavell Investments. Robin joined Leavell in 2019. His previous work experience includes thirteen years in commercial banking with leadership roles in relationship management and underwriting. Robin graduated from Auburn University with a B.S. in finance. He holds the CERTIFIED FINANCIAL PLANNER™ designation. Robin has served in various community organizations including JH Outback, UMS-Wright Alumni Association, Victory Health Partners, Rotary Club of Mobile, Leadership Mobile, Partners for Environmental Progress, and Propeller Club. Currently, Robin is on the Mobile Chamber Board and on the Boys and Girls Clubs of South Alabama Board.

Leavell’s Team-Based Approach to Client Relationships

At Leavell, we believe exceptional financial guidance begins with a collaborative approach. Every client is supported by a dedicated team that ensures personalized, comprehensive, and responsive service.

Each client team includes:

• Investment Counselor – Your primary advisor, focused on understanding your financial goals, risk tolerance, and long-term objectives. The Investment Counselor designs a customized investment strategy and holistic financial plan tailored to your unique needs.
• Portfolio Manager – Responsible for executing your investment strategy. The Portfolio Manager makes investment decisions, actively monitors market conditions, and adjusts portfolios to stay aligned with your goals.
• Client Service Representative – Delivers attentive, high-touch service. From account setup and document management to money movement and ongoing inquiries, your Client Service Representative ensures every detail is handled with care.

This team-based structure enables Leavell to provide well-rounded support and long-lasting client relationships built on trust, expertise, and continuity.

Important Disclosures: The statements and opinions expressed in this article are those of the authors as of the date of the article, are subject to rapid change as economic and market conditions dictate, and do not necessarily represent the views of Leavell Investment Management, Inc. This article does not constitute investment advice, is not predictive of future performance, and should not be construed as an offer to sell or a solicitation to buy any security or make an offer where otherwise unlawful. Investing in securities carries risk including the possible loss of principal. Individual circumstances vary. Past performance is no guarantee of future results.