Re: An experiment with riding a mutual fund manager
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Canuck,
You minimize risks more by owning the whole market than you do by owning 15 stocks? That is amazing, I can't believe no one ever thought of that before!
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Please read the article next time before you respond. If you did read it then work on your reading comprehension.
His point was that by owning 15 stocks you can indeed eliminate nonsytematic portfolio risk, however you risk missing out on certain super stocks that increase several hundred times in value. These might contribute significantly to your portfolio's earnings.
Also, about the author:
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William J. Bernstein is an American financial theorist, known for pioneering research in the field of Modern Portfolio Theory. Bernstein is also highly regarded for his self-help finance books for individual investors who wish to manage their own equity portfolios.
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