When the hype is reaching new heights, it may be a good time to reach for the tried and true.

As the S&P 500 (^GSPC) sets new records and "Magnificent Seven" trades such as Nvidia (NVDA) sail past red to white hot, remember to keep an even keel, advised life and business strategist Tony Robbins.

"If a Ferrari was on sale for 70% off, you'd buy it. But when your favorite stock is, people freak out. And when the thing is too expensive, they want to buy it," Robbins told Yahoo Finance. "It's the crazy part of humanity."

Long-term fortunes are not built on a single asset class, let alone a single industry. Diversification is key to wealth generation, said Robbins, who has interviewed the likes of billionaires Ray Dalio, Robert Smith, and Berkshire Hathaway's (BRK-A, BRK-B) Warren Buffett. His latest book, "The Holy Grail of Investing," digs into the power of alternative assets in a world obsessed with stocks.

"There [are] 250,000 companies that are from a $100 million to $3 billion [in value] that private equity can step into," said Robbins. "Instead of trying to evaluate [the Magnificent Seven], create the diversification for yourself. So you reduce your risk by 80%."

His other tip for success includes turning a consumer mindset into an investor mindset: Those iPhone upgrades will cost you thousands, but a pile of Apple (AAPL) stock can set you up for the future.

And regardless of where you're sitting in life, staying hungry can turn a losing tide — or extend a winning streak.

"If you're hungry, you'll find the answers. If you're hungry, you'll push through," said Robbins.

Video Transcript

BRIAN SOZZI: I'm Brian Sozzi at Yahoo Finance here and investors continue to make a lot of mistakes when putting money to work. We caught up with life and business expert Tony Robbins to see how you can become a better investor. How does Tony Robbins spot a good potential investment and avoid mistakes?

TONY ROBBINS: I've done everything in my life by saying success leaves clues. Find the best in the world, figure out exactly what they do, do the same thing, and your chance of success go up a hundred fold. So I interviewed 50 of the greatest investors in history for "Money Master the Game," more for "Unshakeable." And this time, what I love is you know, you look at geniuses like Ray Dalio, or Paul Tudor, or any of the great Warren Buffetts, they're trying to find alpha in some way.

What I love about private equity today is they used to break things up and just sell them, it's too competitive for that now. Today, they really have to create alpha. They take a company, they see how to grow, it they see how to expand it, and they make it work. So I'm constantly interviewing those individuals, so I'm on the cutting edge of what's there. But my goal is to bring that to the general population.

BRIAN SOZZI: You talk to all these big name investors, let's single out Robert Smith. And you spend 10 minutes with him and you get why he's Robert Smith and why he's just a successful investor. But as you talk to all these people, are there a couple traits you can point to that make them masters of the universe?

TONY ROBBINS: They are obsessed with adding value. They're not just trying to find value, they're adding value, and Robert's perfect example. He started with nothing and he built $100 billion fund. He's the wealthiest African-American in this country.

But he built a system, that's what most of these guys have done that are very best. He knows SaaS better than anybody out there. So if you're going to have software as a service and you're going to be a company, he has every aspect of it, he has all the leading minds in that area, he knows who the best CEOs are to get, he knows how to change the cost basis, and then how to create that multiplied effect and sell to a bigger company or sell someone else. So each one has found usually a niche, and they have systems, and they run it like it is a machine. And that's why they're able to keep doing this compounding that most people would think would be impossible to do.

BRIAN SOZZI: But for people that come to you and say, hey, I want to be a successful investor, what mistakes do you still see them making today?

TONY ROBBINS: Well, I think most people are in a position where they watch the news and they react accordingly as you and I both know. We all know what happens. Everybody, when the market-- if a Ferrari was on sale for 70% off, you'd buy it. But when your favorite stock is, people freak out.

And when the thing is too expensive, they want to buy it. It's just it's a crazy part of humanity. But I think it's also in our society the biggest thing that's missing is that we teach people to be consumers not owners.

The other day I was trying to teach this to some young people, so I went and did a little homework. I made a little chart. Do you have an iPhone?

BRIAN SOZZI: I do have an iPhone.

TONY ROBBINS: OK, most people do, right? I said, how many have iPhones? All raise their hand.

I said, well, I've had iPhones since the beginning. I bought a new iPhone each year. So I sat down and figured it out what the dollar amount was. I've spent $20,600 on iPhones since 2007. If you would have bought the stock at this-- you put that amount of money of what the phone was each year because I looked it up and the amount of stock you get, the stock today is worth $206,000.

BRIAN SOZZI: We've seen a phenomenon in markets right now called Magnificent Seven. People are just buying these seven stocks-- Microsoft, NVIDIA, you name it almost blindly, Tony. What is it about human psychology that is making people buy these seven stocks and not the other 493? And then what's the downside risk of that?

TONY ROBBINS: Well, I think you and I both know I'm concerned about it as well. But they're all-- everyone's betting on AI, which is probably a decent bet. The NVIDIAs of the world are probably doing well. I don't know what the right valuations are. I wouldn't try to make those decisions myself.

But I think when things get that concentrated-- think about it, there used to be 8,000 stocks. Now, 3,300 in the NASDAQ. I think it's 2,700-- they're 3,700 overall. That's not a lot of stocks. But there's 250,000 companies that are from $100 million to $3 billion that private equity can step into.

BRIAN SOZZI: If you own these seven stocks and you're sitting on these gains, how do you just pull yourself out of this vortex? You have to just say stop, OK, they're overvalued. I got to get out. But how do you do that psychologically?

TONY ROBBINS: Well, everyone's different--

BRIAN SOZZI: No pressure.

TONY ROBBINS: Everyone's different, so I can't tell you one way to do it. But I don't know that-- I'm not the person to evaluate those. I would just say diversification, we all heard it a million times, but Ray's version of it to me is the most exciting. I remember he taught me this and then I was looking to find where can I find these uncorrelated investments. And I would say instead of trying to evaluate that, create the diversification for yourself, so you reduce your risk by 80%. And I think you can get that when you broaden the base of what you can invest in instead of getting locked into just stocks and bonds that's just this public market or just the S&P.

BRIAN SOZZI: You've had access to people, really big names early on in their careers, Ray Dalio, Marc Benioff who the Yahoo Finance community knows very well. What is it about some of these folks? How did they get ahead? Is there a key trait?

TONY ROBBINS: Intelligence. I love wickedly smart people, but I know a lot of very smart people that pragmatically can't fight their way out of a paper bag. So to me the number one thing I see as in common is hunger, a hunger that doesn't go away.

Marc is still hungry, still driven right. He doesn't need to be. I don't need to be. You don't need to be.

But when somebody is hungry to be more, do more, give more, share more, and it doesn't go away. It's like I'm hungry to lose weight to go to a party, that's different than I'm hungry to contribute more than I ever have in my life. Because if you're hungry, you'll find the answers. If you're hungry, you'll push through.

And it's finding something-- there's two types of motivation. There's push motivation, you're trying to make yourself do it, and there's pull. Pull is 100 times more valuable. You're going to run out of push.

Pull, is there something here you want to serve greater than yourself, your family, your friends, your community, your company, your mission? That is what makes the difference in the quality of people's lives. If you can find that kind of hunger or awaken it, that's my job sometimes is help people awaken it because it's in there.

But most people don't believe or they've had so many disappointments that they give up. They get to a point where it's like, oh, it's all BS. It's never going to work. But if you break through that and you show them a new path, people can do extraordinary things and we see it every single day.