Talk with an investment advisor, and what’s the first piece
of advice you will hear? Diversify your portfolio. The case
for diversification is repeated so often that it’s come to
be thought of as an indisputable rule. Hardly anyone makes
the case against diversifying your portfolio. But
because we believe that too much liquidity has made all markets
act similar to one another, we make that case. Heresy? Not
at all. Just because investment banks and stock brokerages
say you should diversify doesn’t make it true. After all, their
analysts nearly always say that the markets look bullish and
that people should buy more now. For a breath of fresh
air on this subject, read what Bob Prechter thinks about diversification.
This
article was syndicated by Elliott Wave International and
was originally published under the headline On the Docket: The Case Against Diversification.
EWI is the world’s largest market forecasting firm. Its staff
of full-time analysts led by Chartered Market Technician
Robert Prechter provides 24-hour-a-day market analysis to
institutional and private investors around the world.
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