The diversification myth

The diversification myth. Is buying a stock to improve your portfolio diversification a sensible idea? It sounds like it. Well-diversified portfolios lower risk by narrowing the range of potential outcomes. And owning stocks in different sectors is a good way to achieve that goal. Your broker will almost certainly agree. 'You have to own the banks', he'll say, 'because they account for 30% of the market'. Your financial advisor will sing the praises of diversification, too. Trouble is, they're letting diversification - rather than value - drive the buying decision. Diversification might be desirable, but let value drive your decision to buy. Read the whole article here: (VIEW LINK)