In 2001, when the total return for the S&P 500 dropped 11.9
percent, the total return for the Russell 2000 rose 2.5 percent; in
1998, when the total return for the S&P 500 was a gain of 28.6
percent, the return for the Russell 2000 dropped 2.6 percent.1 So
when one was up the other was down. That is diversification. To
reduce risk you have to accept the fact that something in your
portfolio may not always be doing well.
percent, the total return for the Russell 2000 rose 2.5 percent; in
1998, when the total return for the S&P 500 was a gain of 28.6
percent, the return for the Russell 2000 dropped 2.6 percent.1 So
when one was up the other was down. That is diversification. To
reduce risk you have to accept the fact that something in your
portfolio may not always be doing well.
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