Does Diversity Matter In A Financial Meltdown?
Wednesday December 10, 2008
While having a diverse portfolio of investments can help to minimise losses when trading on stock markets, does diversity matter when stock markets are falling in value? If everyone seems to be losing money, what point is there in spreading funds across multiple companies?
For one, it is important to remember that when trading in stock market shares you are actually trading in specific opportunities. It can be reasonably simple to turn a profit when stock markets are doing well, but it takes skill and knowledge of your specific investments to keep making money during difficult times. Maintaining a portfolio that minimises losses and is ready to make steady gains once the market begins to recover takes a lot of effort, but could be worthwhile for those who can afford to spend the time and money to see their investments through the financial crisis.
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