Everyone knows they should have a diversified portfolio, but why do we diversify? Tune in as Tom and Tony talk about the reasons we should diversify a portfolio.
Had you placed $5,000 in the Nasdaq in 2000 you would have $8,600 today. Investing $5,000 in Apple you would be worth $240,000. Alternatively if you had invested in PETS.com you would have $0.
Here’s why we diversify:
Decrease exposure to idiosyncratic risks
Reduce standard deviation of portfolio
Offset potential losing positions
Diversification reduces risk and can lower returns in the short term, but preserving capital is what leads to long term success.
Tune in to see Tom and Tony discuss why you should diversify!