The Power of Diversification

In my last post we discussed the three key concepts that determine the price of an individual security.  Here we’ll explore the importance of diversifying your investments.

More than five decades of academic research has confirmed two key benefits of diversifying and they’re among the most powerful concepts in financial economics: (a) Having a diversified portfolio reduces your exposure to different types of investment risk and (b) diversification can also improve your expected returns. Here you’ll learn how to keep your investment costs down; limit your exposure to company-specific, country-specific and investment style risk; succeed in all types of market cycles and how to be properly compensated for the calculated investment risks you do take.

Capture

  • Insight #4: The Full Meal of Global Diversification
  • Insight #5: Managing the Market’s Risky Business
  • Insight #6: Get Along, Little Market

In my next post, we’ll look at the four keys to understanding risk and return factors.

 

Registration with the SEC should not be construed as an endorsement or an indicator of investment skill, acumen or experience.  Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal.  This communication may include opinions and forward-looking statements.  All statements other than statements of historical fact are opinions and/or forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”).  Although we believe that the beliefs and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such beliefs and expectations will prove to be correct.  Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.  Historical performance is not indicative of any specific investment or future results.  Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss of income and/or principal to the investor.  Investment process, strategies, philosophies, allocations and other parameters are current as of the date indicated and are subject to change without prior notice.  Nothing in this communication is intended to be or should be construed as individualized investment advice.  All content is of a general nature and solely for educational, informational and illustrative purposes.  Any references to outside content are listed for informational purposes only and have not been verified for accuracy by the Adviser.  Adviser does not endorse the statements, services or performance of any third-party author or vendor cited.  Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only.  Adviser’s clients may or may not hold the securities discussed in their portfolios.  Adviser makes no representations that any of the securities discussed have been or will be profitable.

About Chas Boinske

Charles P. Boinske, CFA, is a 30 year investment management veteran overseeing the strategic direction and portfolio management process for Independence Advisors, LLC. Have a question for Charles? CLICK HERE TO ASK CHARLES

, ,