Times of volatility in the market often remind investors of the importance of diversification in their asset allocation. The last few days have seen some heightened volatility, and while stocks have been on a tear for what feels like a long time, you can see the benefits of a diversified asset allocation.
Diversification and the Efficient Frontier
According to Harry Markowitz, the developer of the Efficient Frontier you see in the chart below, diversification is the only free lunch in investing. He called it that because it was the only way he had found to both increase return and reduce risk.
Action Line: When you want to talk about diversification in your investment portfolio, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
Dick Young to Your Survival Guy: “Diversification Is Discipline”
