Warren Buffet said, "Diversification makes very little sense for anyone that knows what they’re doing." He also said, "Diversification is a protection against ignorance..." Most of us need that protection against ignorance, yet diversification often makes us feel bad when some of our holdings don't do as well as others. We make the case why we should diversify anyway. Topics covered include: Warren Buffet says it's crazy to own more than 30 stocks, but Berkshire Hathaway owns 48 … [Read more...]
297 Plus: May 2020 Investment Conditions and Portfolio Review
In Plus episode 297 for the week of May 8, 2020, we review the latest economic trends, market valuations and market internals. We review the intrinsic value of stocks, why they historically have declined during recessions and why stocks may be acting differently during the current global recession. Finally, we review the criteria for when the allocation to stocks would be increased in the Money For the Rest of Us Plus model portfolios. … [Read more...]
275: Are You Over Diversified?
Is it possible to be too diversified in your investment portfolio and how can you tell? Why Warren Buffet thinks diversification is protection against ignorance. In this podcast episode you’ll learn: The skills you need to be able to select individual stocks.How have active managers outperformed relative to passive indexing products.How much diversification is too much and a test to determine if one is over diversified.What is factor investing and which factors have worked over … [Read more...]
254: Should You Be 100% Invested In Stocks?
What are the pros and cons of having your entire investment portfolio invested in stocks versus a multi-asset class portfolio? In this episode you’ll learn: What are some investment options if you want to be 100% invested in stocks.What attributes do you need as an investor to have an all stock portfolio.Why it is difficult for active managers to outperform.Why an all Japanese stock portfolio has severely underperformed for 25 years and how it is possible that a U.S. stock … [Read more...]
MNY030 Plus: Diversification
In this week's Money For the Rest of Us Plus episode, I discuss: Why perfect portfolios don't exist Is it possible for an individual investor to invest in timber. Is it possible for individual investors to construct an All Weather Portfolio A simple investment that Ray Dalio owns that has an asymmetrical risk/reward pattern that you can easily replicate. Why investors should diversify their stock exposure even though the return drivers are similar. Why value stocks outperform … [Read more...]
30: Are You Sure You’re Diversified
How to tell if your investment portfolio is really diversified. Hint: Don't focus on correlation. Photo by J.D. Stein In this episode, you'll learn: What is correlation as used in Modern Portfolio Theory and what are its flaws.What three questions should you ask before you make any investment.What are the characteristics of a perfect portfolio.What is a asymmetrical risk-reward pattern.Why timber is an attractive asset class.What is the primary driver of stock returns.What is the … [Read more...]
