DIVERSIFICATION...?

MK62

GeoffTF said:

Linton said:

Given that is the case the next risk to consider is that of correlated failure across individual sectors, geographies etc.  The best protection is surely to minimise high concentrations of investment in any particular companies or  identifiable sub-class.

I would suggest that a significant reason why the US is so dominant in world markets is that there are more investors  in the US for whom "international" investments are seen (possibly correctly for them) as higher risk than elsewhere rather than any group-mind effect.  Were market prices to be determined by say Chinese investors the global ndexes could look very different.

A market weighted portfolio has the greatest diversification.

We'll have to agree to disagree on that then.......

j_netprofit

I'd agree with GeoffTF there, at least for my personal investments. 

UK hasn't looked good for a very long time...plus backing Geoff it makes up less than 5% of the global economy so how is splitting it equally with the US for example considered diverse?! 

Emerging markets as a whole generally underperform, unless the new tesla pops up from Saudi...? And that's a risk I'm not comfortable with.

eskbanker

jay_ftw said:

I'd agree with GeoffTF there, at least for my personal investments. 

UK hasn't looked good for a very long time...plus backing Geoff it makes up less than 5% of the global economy so how is splitting it equally with the US for example considered diverse?! 

Emerging markets as a whole generally underperform, unless the new tesla pops up from Saudi...? And that's a risk I'm not comfortable with.

If you're wanting the bolded opinions to influence your investment strategy then you're choosing to make decisions that will lead you away from single global trackers and more towards bespoke allocations - it's a perfectly valid approach if you're comfortable with that responsibility, both for the initial choice and then subsequent rebalancing.