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Portfolio Risks Analysis

10 Reasons Why Diversification Does More Harm Than Good

10Warren Buffet says: Wide diversification is only required when investors do not understand what they are doing

9Putting tainted eggs into many baskets when implementing the rule of “don’t put all the eggs in one basket” – And who pays for the baskets?

8Thinking diversification reduces 90% of the risks when it is more like 70%, or sometimes 30%.

7There is something known as systemic risks – risks that cannot be diversified.

6Monitoring financial markets 24 hours a day, from Tokyo to Amsterdam, from London to New York – Instead of just New York.

5Diversification in the short-run sounds great; in the long-run, average.

4The call for diversification is the result of a few bad beginnings.

3Diversification is for the average man.  When you have $10,000 for investment, it is too little for diversification.  When you have $100 billion, it is too difficult to diversify.

2The best results from diversification, are the bad ones you don’t count in the portfolio.

1Diversification takes the intelligence out of the equation.

 

” Wide diversification is only required when investors do not understand what they are doing “
~ Warren Buffett

 

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