Portfolio Strength in Diversification

Recent market volatility notwithstanding, 2016 has been a “relatively good” investing year. This according to Zachary Karabell, head of global strategy at Envestnet, in an article for Barron’s. His opinion, however, is based on performance of a diversified portfolios as opposed to “esoteric” strategies such as “those of many hedge funds.” The performance of assets this year, he writes, “should be a sign that markets are stable and performing decently, rather than a harbinger of bad times ahead.” While Karabell says there is a widespread belief that 2015 was an awful investment year, he argues that while many lost money […]

Diversification: The Only Free Lunch on Wall Street

The value of long term asset diversification, sometimes known as “the only free lunch on Wall Street” is discussed in a recent MarketWatch article offering “Five Steps to Beating the Market.” “Stock investors typically regard ‘the market’ as essentially the Standard and Poor’s 500 Index of large U.S. growth stocks.” The article tracks and summarizes financial performance records since 1928 for large-cap blend the (S&P 500), large-cap value, small-cap blend, small-cap value stocks and a four-fund combination of these asset classes. In every summary, the four-fund combination produced a superior return to the S&P 500 alone. However, the price investors […]

Diversification: How Many Stocks Is Enough?

In his bi-weekly Hot List newsletter, Validea CEO John Reese offers his take on the markets and investment strategy. In the latest issue, John looks at the issue of diversification and the performance of different-sized portfolios that he runs on Validea.com. Excerpted from the May 11, 2012 issue of the Validea Hot List newsletter No one — not Warren Buffett or Peter Lynch or David Tepper — is right on every single stock pick. And when you are wrong, you don’t want the losers to take down the rest of the portfolio with them. So the question, then, is how […]