Christian Louboutin Outlet- Avoiding Over-Diversification

Too many individual stock positions can result in high levels of required due diligence, complicated taxes, and performance that mimics a stock index (but which costs more than it would to trade on that index). christian louboutin-pumps-outlet widely accepted that it takes around 20 to 30 different companies to adequately diversify a stock portfolio (though there are varying opinions on this), and these stocks should be invested in companies across different industry groups and should match an investor's trading style. Privately-held, non-traded investments like the publicly traded investments you own Non-publicly traded financial products are promoted for their price stability and diversification benefits when compared to publicly traded products. Although these products can diversify your portfolio, their risks may be understated by the irregular methods used to value them (such as estimates and appraisal values rather than market transactions), which can artificially smooth an investment's return over time. christian louboutin outlet smoothing can overstate a product's diversification benefits by understating its volatility and correlation relative to more liquid assets. Additionally, if these products are similar to the publicly-traded ones you have already invested in, you lose the benefit of diversification. In the case of the man on the street, he probably doesn't recognise over-diversification. In the case of your financial adviser, it comes down to job security and revenue. Christian outlet a financial adviser fears losing accounts over unexpected investment outcomes, this could motivate him to diversify your investments to the point where they don't move in either direction. And, with mutual funds, it is easy for the adviser to spread your portfolio to other investment managers. And, over-diversifying your portfolio could help an adviser earn more in fees and charges for individual investments. So, the lesson to take from this is to actively work with your financial adviser - ensure that you understand everything in your investment portfolio, why you own it and how it contributes to your investment strategy and goals. Becoming involved in the diversification process is the best way to both hedge your portfolio and make it perform to its greatest potential Pumps outlet.