Diversification on Steroids

Are You Diversified?

Some savvy investors think that because they have allot of stuff that they are adequately invested in the market and diversified. But have they really checked their portfolio to make sure that their holdings are correlated with dissimilar price movement and that they are in every sector and market that they possibly can?

Don't let the media and brokers talk you into an investment (ie. mutual fund) and convince you that this investment gives you diversification and safety. Most mutual funds are unsuccessful in fact 85% fail. In 2008 FIDELITY MAGELLAN Fund, one of the premier mutual funds in the country was down 50%, so even the most respected and previously successful funds have had problems last year.

Harry Markowitz who wrote his doctoral thesis in the 1950's and won the Nobel prize for it in 1990 came up with Modern Portfolio theory. The basis for his theory was that through proper diversification and negative correlation you can reduce risk by combining these strategies and that you can make your portfolio a more efficient and predictable.

A structured portfolio composed of no load indexed mutual funds consisting of over 14000 holdings in 39 countries is what you need to accomplish thourough diversification. We take this one step further by looking at several other variables promoted by academics of the markets and implementing them as well. My clients are enrolled in such a program and are on the road to getting peace of mind with their investments and money and to leading an abundant life as opposed to one of scarcity. This is what I help them succeed in as a coach.

In order to know if your portfolio is properly diversified and to access the amount of risk, you will need to analyze it using the Free Market Investment Analysis. From this you can determine the specific risk or standard deviation (a measure of risk)for your portfolio. Then you can look at the asset categories which comprise it and determine if the risk is justified for the returns you are getting. Or, if you can improve your situation by either reducing the risk for the same return or increase returns for the same amount of risk.

If you are interested in looking at your portfolio to see if you are getting the returns you deserve based on the amount of risk you are taking you should call my office for a Free Market Investment Analysis.

For more information about these and any other services I provide visit my website at http://www.yourwealthadvocate.com/ or call me at 610-977-2422.