Sam -- Altho I haven't read Tobin, it does seem sensible- if not obvious- that diversification reduces risk. Also, it follows that diversification is maximized if investments are as orthogonal as possible. Therefore, it is prudent to invest in real estate, foreign stocks, bonds, currency, art, gold, cash, etc, as well as stocks from different business groups. This served me well during the recent free-fall of the NASDAQ.
However, what is correlated somewhat is prudence in each of these areas. The person who said, "A fool and his money are soon parted," did not win a Nobel prize, but should be considered for one <vbg>.
fred |
