diversification

What is diversification?


Diversification involves the planned distribution of investments across various securities to minimize the risk exposure to a specific industry or geographic segment. However, the risk of over-diversification exists, in which an investor can at best expect to mirror the market returns, minus any brokerage fees or management expenses.

Quick to take the lead in changing trends, Google continues to rate as one of our best tech stocks
Home renovations spurred by an improved real estate market help keep Stanley Black and Decker one on our best stocks to buy in the U.S.
We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks. Here’s a look at six international ETFs:...
Production problems solved, the 787 Dreamliner has over 1,000 sales, and that keeps Boeing high on our list of blue chips stocks.
As one of the world’s largest energy stocks, Chevron has the resources, and refineries, to thrive in the face of lower oil prices.
One of the tech stocks that has had the greatest success for us, Apple is banking on Apple Pay and Apple Watch for its next growth spurt.
Main Street Capital Corp., $30.59, symbol MAIN on New York (Shares outstanding: 49.0 million; Market cap: $1.5 billion; www.mainstcapital.com), is a specialty finance company that lends to, and invests in, small and mid-sized firms, with a focus on those with yearly sales between $10 million and $150 million. Main Street has benefited from a recent major upgrade to its bond rating: in September 2014, Standard & Poor’s assigned it a BBB rating with a stable outlook. A BBB rating is defined as having “adequate capacity to meet financial commitments but more subject to adverse economic conditions.” It’s enough to qualify Main Street’s debt as investment-grade, making financing much cheaper for the company than for many other specialty finance firms with lower, junk bond-level ratings....
It’s generally a waste of time to obsess about the possibility of a short-term downward movement in the economy, stock market or both. These downward movements can occur for a wide variety of reasons, at any time, without warning. For every “real” short-term downturn, you can spot a dozen fake-outs – situations where the market or economy looked like it was going into a tailspin, but pulled out of the drop and began rising at the last minute. On the other hand, it pays to obsess about matters like portfolio diversification, investment quality, and the extent to which your portfolio suits your personal goals and temperament. Hidden assets are also worth a close look. As long-time readers know, we’ve had a great deal of success over the years in investments that come with hidden assets. These are assets that are worth substantially more than the value they carry on the company’s balance sheet, if they appear there at all. Buying stocks with hidden assets is a little like getting something for nothing, at least for patient investors....
Stock Investing
We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification. Still, investing internationally remains riskier than investing in North America. With stocks markets around the globe, you may face language barriers, uncertain investor-protection laws, and in some cases a less pronounced commitment to openness, fairness and other qualities we tend to take for granted in established markets. One of the best ways to make it easier to profit on foreign markets is with American Depositary Receipts (ADRs). An American Depositary Receipt is an investment unit for foreign companies that trade on a U.S. stock market. These units can represent fractions of shares, whole shares, or multiple shares in the foreign company. ADRs can help you simplify your international investing by letting you buy foreign shares on U.S. exchanges without the complications of buying or selling on a foreign exchange, in a foreign currency....
iShares U.S. Small Cap Index ETF (CAD-Hedged), $27.33, symbol XSU on Toronto (Units outstanding: 6.1 million; Market cap: $166.7 million; www.blackrock.com), aims to track the Russell 2000 Index (hedged against the Canadian dollar). The fund’s MER is 0.36%. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index (which measures the performance of the 3,000 largest U.S. firms based on total market capitalization, or “market cap”; these 3,000 represent around 98% of the U.S. equity market). In all, the Russell 2000 represents around 10% of the Russell 3000’s total market cap. The Russell 2000’s average market cap is about $1.3 billion, while the median market cap is about $528 million. The largest company in the index has a market cap of roughly $5.0 billion....