For questions related to diversification in investment portfolios, the practice of investing in multiple assets with the goal of managing risk.
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2answers
37 views
What is the theory behind Rick Van Ness's risk calculation in the video about diversification?
In the video, Rick Van Ness states the following scenario:
Stock A has a 7% return with +/- 1% risk
Stock B has a 3.5% return with +/- 0.5% risk
Stock A and B are perfectly negatively correlated.
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6
votes
1answer
165 views
How do small cap stocks perform vs. large cap stocks (like Dow constituents) during bear trends?
Does anyone have any good information on how small cap stocks, e.g. < $500M, perform during bear trends and/or recessions in comparison to large cap stocks like the Dow Jones Industrial Average ...
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3answers
1k views
How should a new investor allocate funds in a Roth IRA?
I started a Roth IRA a little while ago, contributing ~$5,000, and I'd like some guidelines on how I should diversify my investments. Should I invest in stocks or bonds or mutual funds or ETF? What ...
7
votes
2answers
174 views
Is there any real risk in having all mutual funds with the same brokerage?
My retirement accounts (Roth IRA and traditional 401k) are with Fidelity. In the unlikely even that Fidelity goes under, what happens to my money - is it gone? If so, does it make sense from a risk ...
5
votes
3answers
272 views
Investment time horizon: When is it acceptable to withdraw money from investments?
I have received a windfall of 300K dollars. I am 23, have no debt, college educated. I want to have a mini retirement when I am ~40 years old. I plan on managing a diversified portfolio of index ...
1
vote
4answers
313 views
What is an ideal number of stock positions that I should have in my portfolio?
Is there a certain number of stock positions that one should keep in a portfolio? For example what makes more sense ?
Option 1: $10,000 spread among 5 solid stocks, if you find new stock then remove ...
2
votes
1answer
271 views
Are there any online tools to examine asset allocation and portfolio diversification?
Are there any good online tools to examine asset allocation, portfolio diversification? I would be interested in being able to plug in numbers, run scenarios etc.
I could build a worksheet in Excel ...
1
vote
1answer
85 views
Any diagramming techniques to help diversify/rebalance a portfolio of investments?
I was thinking about how to diversify a portfolio of investments and started scribbling a few diagrams down.
I want to plan a diversified portfolio of stocks/investments so there maybe either a 50/50 ...
0
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2answers
257 views
Diversified portfolio return calculation & comparison to return from real estate only?
Here's a sample portfolio.
If we assume that he invested $100K in the beginning (2005), is it correct that if he sold his entire portfolio and the end of 2009, he would have received $121,394?
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4
votes
3answers
193 views
How can I find a high-risk, high-reward investment that is not strongly correlated with the U.S. economy?
I'm looking to add something to my investment portfolio for diversification. Right now, I own mostly a U.S. stock index fund, with a little bit of an international stock index fund, bonds and cash ...
6
votes
2answers
228 views
Stocks vs. High-yield Bonds: Risk-Reward, Taxes?
Assuming one is looking for a fairly high-risk, high-reward investment, what are the advantages and disadvantages of a diversified stock portfolio (e.g. an S&P 500 index fund) vs. a diversifed ...
12
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3answers
142 views
Do I need to own all the funds my target-date funds owns to mimic it?
I just calculated out that investing my Roth IRA in a Lifecycle fund will cost me about $65k more than investing directly in the underlying funds, effectively doubling the expense ratio. And the funds ...
6
votes
2answers
175 views
The Asset Allocation Paradox
I've had this problem stuck in my head for a while and I'd like some help with it. In David Swensen's Unconventional Success, the argument is made that asset allocation is the best way to get a good ...
4
votes
3answers
512 views
I'm 23 and new to investing. How should I diversify my 401(k) based on my plan's choices?
My employer matches 100% of up to 4% of my gross salary. I want to contribute at least what is matched. I'm 23 and have a gross salary of $70k, and I know very little about this. I was hoping someone ...
2
votes
1answer
202 views
Is there such a thing as “over diversification”?
I went to an investment advisor today, and asked him his opinion about splitting my foreign (non NIS/Israei) investments between VTI and VEU.
He said that he thinks it's "too diversified", and ...
3
votes
3answers
422 views
“Diversifying” by going Long and Short Simultaneously
I was hoping someone could take a critical eye to an idea i've had.
Traditionally it's said that one should diversify across various asset classes and ultimately types to spread the risk out based on ...
5
votes
2answers
308 views
Should you diversify your ETF investments between companies?
I've found a number of interesting index funds, of which a lot are run by Vanguard. However, since I'm diversifying my investments between index funds, it seems sensible that I'd want to make sure all ...
4
votes
3answers
99 views
How to diversify P2P lending accounts?
I've been interested in peer-to-peer lending for 3-4 years now since I first heard about it with Prosper.com. I've since heard about Lending Club, and this Q/A gave me a lot of insight.
In ...
1
vote
1answer
92 views
Using stock markets in Europe, how can I buy commodities / resources, to diversify my portfolio?
I am in Europe and I would like to differentiate my portfolio in buying resources, such as oil, sulphuric acid, titanium etc. Of course not in material form, but as stocks. How can I achieve this?
7
votes
2answers
188 views
What ways are there to invest in stocks, options, indexes, etc, and where should one start (what funds)?
I have been poking around with investing for a few years now. I have diversified my assets a decent amount, between a home, several IRA's and 401k's, savings and checking accounts, and a little bit of ...
5
votes
3answers
65 views
Including the region where you live in your investment portfolio?
Diversification in an investment portfolio is generally recommended. Can my portfolio benefit from avoiding investment in my local economy?
When browsing several US sites for investment advice, they ...
0
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1answer
168 views
Why are “random” deposits bad?
The deposits of private investors often consists of random securities, caused by tips of friends, banks and exchange newspapers. It is said that the ratio of risk and return cannot be optimal like ...
8
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4answers
236 views
What is the theory behind diversification? Why does it work?
We are told always that diversification in a portfolio is good. "Don't put all your eggs in one basket." But is there mathematical theory behind diversification to back up the advice?
