Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

Diversification does reduce the risk of losing it all, as it changes the probability distribution (https://en.wikipedia.org/wiki/Probability_distribution). It also reduces the probability of winning a lot, but people like stability.


Only if the assets are uncorrelated and independent.

Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).


Not "Only if the assets are uncorrelated and independent", but "As soon as the assets are not 100% correlated".

That is a huge difference. The dot com bust affected (almost) all tech stocks, but they didn't all go bankrupt.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: