Of course it's an extreme figure!
Some investors will not let one stock exceed 5% allocation in their portfolio. This is to prevent 1 stock blow-up from damaging their entire portfolio.
This I can understand. But I curious.
Whether its 1 big water-melon, or a few apples, or a bunch of grapes - aren't they all in the same single basket?
So if it's Sept 11, SARS 2003, or other external shocks, when the basket's bottom fell out, won't all the fruits be smashed?
What if we spread our equities holdings over several markets? But aren't all stock markets more or less correlated? Did any stock exchanges in the world held-up during the 2008/9 financial crisis? There must be some. If they are; we probably don't have access due to currency controls, liquidity, or restriction issues ...
I do own some silver, RMB, bond fund (indirectly through pension fund), EURO and of course SGD. (A glaring gap is investment property)
Do you practice asset allocation to diversify against risks? Or do you stick with "quantity diversification" in the same asset class as your main form of diversification?
How is your experience? Which works better? Or do you practice both?
Singapore Man of Leisure (welcome to my blog; just google it!)
