If you’re reading this right after I click publish, you’re probably staying up like me to watch the US market and to see the longest lunar eclipse in a decade. Unfortunately, you’re not going to see much difference when you Alt-Tab between your stock screens and your room window:
On Diversification, and Risk
Greece and the Euro are falling apart like they must, and stock prices here in Singapore will be affected on tomorrow’s open. That, friends, is why (international) diversification is increasingly failing investors, despite being taught as the “only free lunch” for the past 50 years (perhaps >400 years, if you count ”Not To One Bottom” Shylock in Merchant of Venice).
As much as we would like to believe diversification creates risk reduction out of thin air, it does not. This is the Law of Conservation of Risk – it cannot be created or destroyed (or diversified), ...
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