Earlier quoted context omitted.
Diversity is useful though. Stocks have crashed in the past, and they will in the future. As has real estate and every other investment. You thus need a backup plan in case your investment fails. I make no attempt to predict WHEN these crashes will happen, or how big they will be.
What people tend look at when they consider diversity doesn't work. The standard approach is to look for asset classes with uncorrelated returns. The problem that happens is most asset classes become correlated in a downturn. Look at what happened a year ago. If you had a split between ETFs, REITs and some crypto currency none of those investments would have been doing well.
I tend to think it's not worth it to try to hedge against that unless know you're going to need hard cash for a specific purpose during a recession, like meeting payroll in your own company.
My ide of diversifying is to hedge against industry-specific risks like space launches if Kessler syndrom hits, internal combustion tech if the ICE car ban becomes reality, real estate if the Detroit scenario happens, etc.