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Is your portfolio properly diversified ?

 
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Shahla
Money Managing Guru
Money Managing Guru


Joined: 13 Nov 2004
Posts: 3324

Cash Points ££ 126163.28

PostPosted: Sat Mar 24, 2007 6:27 am    Post subject: Is your portfolio properly diversified ? Reply with quote
If you have ever watch Jim Cramer and his segment “Are you diversified?” then you probably have some idea what lack of diversification means. The idea is to Beat the Market investors should maintain a diversified portfolio. The problem is that many investors think they are diversified and therefore protected from the market's risks (at least somewhat). Well, this might not be accurate.

Gary Marks a successful money manager has written a book that is causing some problems with some brokerage firms. The book Rocking Wall Street: Four Powerful Strategies That will Shake Up the Way You Invest, Build Your Wealth And Give You Your Life Back received a highly complimentary statement from a senior portfolio manager at a major brokerage firm that lead the firm's compliance department to issue a written warning to Mr. Marks not to use his quote to promote the book.

This book offers ideas to help develop a philosophy of investing; explaining specific strategies and techniques to create your own diversified portfolios that balance the risks and rewards of the market. For example, what if the current diversification models were considered too risky and ineffective?

When hedging your investments one of the most common assumptions made, yet not usually mentioned, is all the investments are based on the upward trends in the markets or stocks. When this happens your diversification actually decreases. The reason is that all you assets are counting on the up trends and/or well being of the global markets.

http://www.marketoracle.co.uk/Article588.html
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