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- Topic: Trying to Get My Concepts Right
| Author | Topic: Trying to Get My Concepts Right |
|---|---|
| jonmok @2018-05-29 20:17:15 |
Hello there,
I view this board regularly but post rarely. ;-) I have a problem with diversification. Eliminating non-systematic risk, thereby obtaining the same level of return for lower risk. I understand the theory of it. Now for REAL LIFE. Diversification basically means mediocre returns. Why not just invest in the stock you believe in? That is what I'm doing in REAL LIFE. Plunger?:-) I cannot seem to justify investing my savings into a bunch of stocks just to diversify my portfolio. So I think I do not truely understand diversification and consequently CAPM and SML.%-) Is there anyone who feels the same way? Or is there anyone who understands the concept enough to explain it better? |
| arweb @2018-06-04 09:09:18 |
You seem to understand the concept. What you are not taking into account is your risk level. Obviously you are prepared to tolerate a higher level of risk which means you will not neccassarily be fully diversified. |
CFA Discussion Topic: Trying to Get My Concepts Right
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