CHAPTER 17Unconventional Diversification
Wide diversification is only required when investors do not understand what they are doing.
—WARREN BUFFETT
WHAT IS DIVERSIFICATION AND WHY IS IT SO IMPORTANT?
The idea of diversifying a portfolio has been around for a long time. Yet, because of the volatility in the market, it is often referred to as a “safe haven” and is no longer used by retail investors. I remember a retail investor who once said to me, “Holding long is dead,” following an article I wrote that discussed the benefits of long-term investing. Well, for the most part, holding long and diversification have diminished as research materials have gotten better. The delivery of information is instantaneous, and online brokerage firms encourage ...
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