Portfolio Diversification Strategies
The cluster focuses on debates about the risks of concentrated investments in single assets or stocks and the benefits of diversifying portfolios across index funds, bonds, real estate, and other assets to mitigate market volatility and black swan events.
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A few percent of portfolio into high risk is not a viable strategy [anymore]?
Well maybe people shouldn't be investing their life savings in a single asset...
Guessing the bottom is hard. Spreading risk, like you have done, is a better idea. Maybe be more granular than "money market" and "stocks" though. There's bonds, annuities, real estate, foreign derivitives, and other vehicles too.
May I suggest examining "if 0.1% of your savings is in the market" again? Like what happened with the other 99.9% of your savings?
I'm not downvoting you for sure, given I share your sentiment. However some stocks may exhibit some persistence (as in Hurst exponent > 0.5) so some gambles may be worth taking, in the right proportions (very small). I am also wary of index funds, they share the same likelihood of blowing up as stocks. I like the reasoning of Nassim Nicholas Taleb that sums up to adopting a convex portfolio (barbell strategy) with a lot of sure money that sits there (inflation hedged) and some small bets
Yeah; "diversify for safety by buying this one particular thing we're doing our best to make wildly popular" strikes me as disingenuous advice. "Diversify by holding a portfolio of small, mid, and large-cap domestic and overseas equities, ETFs, bonds, real estate, and other assets in proportion to your risk tolerance and investment horizon" seems to hold up better with a year's hindsight.
This is what I too fear when I hear the ever-lasting optimism of long term investing. Could this become a common reality sometime in future? If yes, maybe the other advise about diversifying (real-estate/precious metals etc) isn't so bad.
this is why just about everyone suggests an appropriately diversified portfolio - stocks, bonds, cash, natural resources, hard assets, etc.
Neither is having ~90+% of your net worth in a single, highly volatile equity.
sure. you've got to watch out for black swans..you should certainly shouldn't plan your portfolio around such a thing. You may as well put your money in CDs.