It's better to be resilient than nimble.Or is it? What are the circumstances where diversification my not
Question:
It's better to be resilient than nimble.Or is it? What are the circumstances where diversification my not be indicated, or might be overkill.
The Motley Fool has always been famous (or infamous) for preaching that investors should not "diversify away your upside." What do you think about that?
Another article on the Motley Fool website also suggested that there may not be as much downside protection from diversification as we think.
Finally, while diversification can reduce risk, volatility, and heartburn better than non-diversification, it doesn't always work as well as hoped. During the 2008-2009 financial crisis, for instance, pretty much every stock fell substantially, and asset classes that had historically performed differently from each other moved in tandem. The relative inefficacy of diversification during financial crises can come as a shock.
What do you think about that statement? Does it prove that diversification isn't worth the trouble?
Expert Answer:
The statement its better to be resilient than nimble is not necessarily true in all circumstances Wh... View the full answer
