The Case for True Diversification
Why Diversification is beautiful in investing
Understanding the meaning of true diversification
To know more read on
1) Imagine you go to Maldives for a Holiday
2) And then the next year you take a vacation to Andaman & Nicobar Islands
3) Then to Lakshadweep and then to Goa
4) The to Mauritius and to Sri Lanka
5) Even after several holidays, your ideas, insights, experiences, food experiences would be the same
6) You will feel enriched but still feel empty
7) You could have as well gone to Goa every year
8)Variety is spice and variety is nice; in life as well as in investing
9) Holidays are experiences and variety gives rise to creativity and expansion of mind
10) So holidays across multiple dimensions ushers in Creativity and Nourishment of Mind
11) Goa, Switzerland, Paris, Egypt, Khajurao, Sikkim represent a portfolio of holidays with value emerging from multiple experiences and fusion of ideas that give birth to more experiences
12) Say for example creating a Casino City or a Spa City. These fusions come from mingling varieties that one experiences by doing large number of different Holidays
13) So diversification is a key ingredient to growing one’s imagination
14) In investing too true diversification happens when you take the pain to understand the schemes that the portfolio holds
15) In an Investment Portfolio, the overlap of stocks, if at all, needs to be kept as minimum as possible
16) But we normally get carried away by excess diversification of schemes only to realise that we have not put together a basket of fruits but instead a basket of Apples
17) Why do we associate women with beauty? Have you every analysed?
18) Women take the pains to bring more diversification to their attire/ dressing up than men who have very little to demonstrate in terms of variety of clothes
19) No wonder men are rarely associated with visual variety
20) Therefore one must be mindful to test your investment portfolio for achieving true diversification
21) In the absence of diversification you only land up exposing the Portfolio to the hazards to uncertainty and risk
I rest my case
