April 21, 2009
By Pamela Yip
THE DALLAS MORNING NEWS
It's one of the fundamental tenets of financial planning: Diversify your investments.
Or, as your mother would say, “Don't put all your eggs in one basket.”
In theory, you can reduce risk in your investment portfolio by combining a variety of investments that aren't likely to all move in the same direction.
It's a good theory, but one that has been tested by the recent financial meltdown, in which stocks, bonds, commodities and real estate have all had their ups and downs – though mostly downs.
So, given the current economy, should you abandon diversification as a strategy?
Not by a long shot. . .
Diversification still works, agreed Brian Bruce, director of the ENCAP Investments & LCM Group Alternative Asset Management Center at Southern Methodist University's Cox School of Business.
“In 2008, if half your portfolio was in fixed income (bonds), you should have done reasonably well,” he said.
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