I thought I would never have to write another post on diversification. I was horribly wrong. If you still don't understand why individual stocks are stupid and almost juvenile, then read this.
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I thought I would never have to write another post on diversification. I was horribly wrong. If you still don't understand why individual stocks are stupid and almost juvenile, then read this.

Part of building a successful investment portfolio includes managing the risk that comes from investing so as to limit your losses and enhance your gains as much as possible. One way to do this is to build a portfolio that involves some diversity.

When building an investment plan, the science of diversification is misunderstood. Diversification is about efficiency over quantity.
How diversifying among stocks and bonds can reduce your risk quite a bit while barely affecting overall return. I show various mixes, from 100% S&P to 100% T-note, and compare returns and risks for each mix.

Before jumping on the diversified portfolio bandwagon, first take a minute to assess what diversification is and whether you need it. Investing is a constant risk-benefit analysis, and that includes weighing your diversification options.







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1 year 13 weeks ago
1 year 13 weeks ago