3 ms·
Only if the assets are uncorrelated and independent. Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).
by confluence 14y ago
Only if the assets are uncorrelated and independent.
Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).
- Someone 14y agoNot "Only if the assets are uncorrelated and independent", but "As soon as the assets are not 100% correlated". That is a huge difference. The dot com bust affected (almost) all tech stocks, but they didn't all go bankrupt.