Two corrections for the broad market in 2018, coupled with bear markets in various segments of the market have many investors facing a decision: do I have the right level of diversification in my portfolio or do I need to make some changes? It’s likely that many people aren’t diversified as well as they should be.
In this episode, Mark Riepe breaks down the ways your cognitive biases might be preventing you from building a truly diversified portfolio. Joining Mark is Omar Aguilar from Charles Schwab Investment Management. Mark and Omar discuss how you can tell if your portfolio isn’t diversified enough—and how you can change that.
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You can read more about how diversification works in this study: “Equity Portfolio Diversification, ( ” William N. Goetzmann and Alok Kumar, Review of Finance, 2008
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Omar Aguilar discusses home country bias in investing in this article: “The Comforts of Home ( ”
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Important Disclosures:
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Correlation is a statistical measure of how two investments have historically moved in relation to each other, and ranges from -1 to +1. A correlation of 1 indicates a perfect positive correlation, while a correlation of -1 indicates a perfect negative correlation. A correlation of zero means the assets are not correlated.
Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed‐income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors
Investing involves risk including loss of principal.
Hypothetical examples are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.
Past performance is no guarantee of future results.
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