Putting some money in the stock market is diversification.

Other than that loose definition like kind can mean anything - agricultural land for commercial, single family for multifamily, raw land for residential, etc etc.What your are talking about when you mention selling one and buying more than one is commonly called a diversification exchange.  

However, with stock prices nearly fully recovered, I was thinking of stepping into property for both diversification and more passive income.

I would look at it from a return on investment standpoint first - 12% on 2 80K houses is the same as 12% on 1 160K house - but then balance that against benefits/challenges of diversification, additional tenants, multiple refinances to pull money out, etc, quality of tenants for less expensive properties. 

I strongly believe in diversification.

Donald Trump will have one answer for you, Warren Buffet another.Since I'm no genius I believe in diversification among asset classes.However I do overweight into real estate because I believe that class favors local opportunism.

I speak w/busy professionals on a daily basis, many from high cost states such as CA, looking for better value, geographic diversification and expert care / investing of their funds.  

We'd call this a "diversification" exchange. 

Diversification is never a bad thing.Okay, now it's time to stop reading and go buy a cup of coffee so we can get velocity of money going again.Happy Investing!

Liquid emergency reserves are a cost of doing business in real estate and there is no way to have them keep pace with inflation at low risk of volatility. 3) for long term yield and diversification I like two asset classes:- Stock market index funds are a good stalwart, and now may be a good time (it’s certainly better than at the start of the year to buy)- If you are willing to be entrepreneurial, small businesses might be a good option.