You might
retort that if all the portfolio were in the Russell 2000, it would
have fallen just 3 percent. But that is known only with hindsight.
With diversification, you have to commit yourself in advance to
the fact that a variety of securities in your portfolio will move in
different directions or at different paces. The simple 50–50 split of
this example is diversification, but you can do a lot more
retort that if all the portfolio were in the Russell 2000, it would
have fallen just 3 percent. But that is known only with hindsight.
With diversification, you have to commit yourself in advance to
the fact that a variety of securities in your portfolio will move in
different directions or at different paces. The simple 50–50 split of
this example is diversification, but you can do a lot more
No comments:
Post a Comment