Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Diversification and "too many funds" are independent things and you can have one without the other. Agree with not too many funds.
But how much to diversify is tied to portfolio strategy. The more one is active in the portfolio management, the less diversified one can afford to be at any point in time as one can adopt to changing conditions. Not being fully diversified and heading to the beach is the worst combination!
Each has to find a compromise for themselves in that spectrum. There is no one shoe fits all. You can also outsource that diversification decision to managers by choosing funds that diversify/concentrate to various degrees.
Diversification has been misunderstood because of media and history. Diversification reduces volatility at the price of performance. There is no way around it. But too many understood diversification as increasing performance using a flawed metric. Google all the articles on Lazy portfolios and you will find a large number of them extolling the virtues of the portfolio by having beaten the S&P 500 year after year. Except last year when that fallacy was exposed. No one had mentioned that the portfolio was underperforming some other components of the portfolio. The reason you have diversification is because you don't know which asset class is going to perform well in a given year and you don't have the time or strategy to change portfolios.
You can also be actively involved in making bets and concentrating your portfolio if you can withstand the volatility and the risks and have a fundamentals or technical based strategy, but that is not for everybody, of course.
Some people do both with different buckets in their portfolio.
Why would you wish to ban those that hold more than eight funds in their portfolio(s) from posting? Your comment seems to be somewhat narrow minded and one that I was most surprised to read coming form someone like yourself. Do you not believe in Freedom of Speech?
Comments
But how much to diversify is tied to portfolio strategy. The more one is active in the portfolio management, the less diversified one can afford to be at any point in time as one can adopt to changing conditions. Not being fully diversified and heading to the beach is the worst combination!
Each has to find a compromise for themselves in that spectrum. There is no one shoe fits all. You can also outsource that diversification decision to managers by choosing funds that diversify/concentrate to various degrees.
Diversification has been misunderstood because of media and history. Diversification reduces volatility at the price of performance. There is no way around it. But too many understood diversification as increasing performance using a flawed metric. Google all the articles on Lazy portfolios and you will find a large number of them extolling the virtues of the portfolio by having beaten the S&P 500 year after year. Except last year when that fallacy was exposed. No one had mentioned that the portfolio was underperforming some other components of the portfolio. The reason you have diversification is because you don't know which asset class is going to perform well in a given year and you don't have the time or strategy to change portfolios.
You can also be actively involved in making bets and concentrating your portfolio if you can withstand the volatility and the risks and have a fundamentals or technical based strategy, but that is not for everybody, of course.
Some people do both with different buckets in their portfolio.
Why would you wish to ban those that hold more than eight funds in their portfolio(s) from posting? Your comment seems to be somewhat narrow minded and one that I was most surprised to read coming form someone like yourself. Do you not believe in Freedom of Speech?
Old_Skeet
Regards,
Ted