When it comes to investing, we've all heard the words "diversify, diversify, diversify." What does that exactly mean? Here are my observations:
1. Diversification tends to be seen as a way to lower risk and ensure smoother returns on investments. While some believe this method yields higher returns over the long run, others believe that it can only achieve average returns.
2. Some people equate diversification with mutual funds. In the past, people would buy different mutual funds in the hopes of being diversified. Nowadays, people gravitate towards index funds and ETFs.
3. There are others who think #2 is hogwash. Rather, they believe that diversification only works over different kinds of assets. These people get diversified by owning stocks, bonds, cash, real estate, businesses, commodities, etc.
4. Yet another group believe in diversification of methodologies. They believe that the type of market or asset doesn't really matter; instead what is important is the number of possible ways to play that particular market.
5. And finally, there are the people who don't believe in diversification, as diversification can only lead to average returns. After all, who wants to be just average?
Is any philosophy better than the other? I don't know, but I think, at the very least, some are easier to follow.
May 14, 2006
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2 comments:
Been reading ur blog for a few weeks now, find it interesting, but It could have been better if your blog layout is neat and nice. Try changing the looks of your blog - download different Blogger Templates at that site. They've got tons of beautiful templates for your needs.
p.s. If you can't find the layout that suits you, try searching Google for alternative. :) keep up the good work
Hi anon,
Thanks for the comment. While I think Blogger has done an excellent job with the templates, I like experimenting with a design that is uniquely my own. The only problem is that nobody tells me what's bad about it!
If you'll let me know specifics as to what you don't like, then I'll do my best to improve upon it. :-)
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