cynic69

What Is Diversification Worth?

Diversification is an incredibly stupid idea. I agree that it goes some way toward reducing losses but it goes a very long way to insure that the retail investor spends a maximum amount of money on commissions and never really makes a bundle in the market. Diversification is the same kind of sillyness as "buy and hold". We are living through a market downturn that proves my point. 90% of the equities in the S&P 500 have sold off. No amount of diversification would have protected an investor from these losses. Investors would be a lot better off to use the time and effort required to diversify to search out companies that have superior fundamental and technical attributes. Making sure to be long in uptrends and short in downtrends would also beat the daylights out of any kind of hokey diversification scheme. The term "diversification" works really great on widows who are trying to keep the family fortune togather during those final years. It also works great to insure that stock brokers can make those payments on the BMW.