2009 Archives

Scramble your eggs

Don't put all your investments in one basket – diversification still rules


The following is from the April 19, 2009, edition of The San Diego Union-Tribune. Professor Brian Bruce, director of the ENCAP Investments & LCM Group Alternative Asset Management Center in SMU's Cox School of Business, provided expertise for this story.

April 21, 2009

By Pamela Yip

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.

Read the full story.

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