Diversification good or bad?
- Thread starter oraclewizard77
- Start date
I usually ask questions that another trader can answer for themselves. I like to challenge conventional wisdom. Rather than dismiss something off hand I like too see if it's something that I've overlooked. So I ask questions. Might help me; might help the person I'm asking
Also I can always learn something new.
You're getting close.The only holy grail is between your ears.
If you are typing to me...
When the offense is winning, you do not put money on the defensive team! For 12 years the markets have been on the offense in growth! So put your money into the offensive! Especially after end of 2015!
For crying out LOUD! My offensive plays DID go down like 15% from entry, but at this point are back up to +15%. Don't panic, believe in the plan, and believe in the markets!
Except T (AT&T). That is the worst POS ever. High-div BS. I should have used that money to get into BTC or SHIB or Doge or whatever, but I am not that sophisticated.
The more diversified your funds are, the more you have chances of making money. You will be able to cover your costs from one or the other investment.
But it works both ways. You don't lose as much but you don't make as much. The more diversified you are the more you trend towards average.
Good for you. However I feel safe with a diversified portfolio. Diversification can decrease the potential returns but it is an important part of my risk management strategy.
Yes, definitely. When we try to reduce our risk we are also reducing the potential gains because somehow risks and profits are directly proportional to each other.
Moreover for diversification, we should always choose the assets that are less correlated. There’s no point in trading the same kind of assets which will give you similar returns.
Diversification is always good. You can never know when and how market turns against your side. I agree with @waynejackson choose those assets that are less correlated. Less relative mobility in prices.
That’s right too. But I am the kind of trader who likes to play it safe. Once a particular asset starts giving me better profits, I will be ready to take more risks on that but not unless I am sure.
I have over 75 stocks, 60% were bought in 2008--all were dividend/optionable, rest were bought when signals happen whether dividend or not but had to be optionable. When I learned how to hedge on opening positions gave me confidence and start using margin.
There is other types of Diversification besides number and sectors in stocks, like Commodities, and options. In my youth there was dollar cost averaging buying, and now am doing Dollar cost averaging Selling, each month been selling off 10% of my dividend stocks for past couple months and shifting funds to Commodities and options. Although I am hedged using short Indexes for remainder of stock position and also short Indexes as trying to find extremes, better percentages can be had in other than stocks right now.
I won't be buying much stocks till another crash happens like 2008.