Thursday, December 30, 2010

Seeking Securities Diversification

Studies show approximately how many securities issues need to be in a portfolio for practical diversification. The futility of the attempt becomes evident when you realize that this pursuit is actually a vague effort for most investors.

Diversification to overcome risk varies by investor needs and characteristics. It has relatively little to do with the number of securities in a portfolio, whether there are thirty or 100 or more invested.

Moreover, investors also tend to seek diversification by purchasing several mutual funds. However, in doing so, they may be duplicating a good amount of their portfolios. ( See the Earl J. Weinreb NewsHole® comments.

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