Diversification is key to reducing risk in an investment portfolio from "summary" of The Little Book of Behavioral Investing by James Montier
One of the most important principles in investing is the idea that diversification is essential for reducing risk in a portfolio. By spreading your investments across a variety of different assets, you can protect yourself from the volatility of any one particular investment. This principle is often summed up in the phrase, "Don't put all your eggs in one basket."When you diversify your portfolio, you are essentially hedging your bets. By not concentrating all your investments in one asset or sector, you are less exposed to the risk of a single investment going sour. This can help smooth out the ups and downs of the market and reduce the overall volatility of your portfolio. Diversification can take many forms...Similar Posts
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