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Re: [sharechat] Diversification Theory

From: "" <>
Date: Tue, 25 Feb 2003 23:14:24 +0000

Hi Capitalist,

>A forward from another group regarding the epistemological aspect of
>investing.... Snoopy, Travis, Phaedrus...I know you're out there....

No need to quote the bible to grab our attention....

>There's another flaw with the diversification theory, beyond not
>accounting the value of your time (as Steve pointed out) and related
>to the asymmetric information problem (as noted by Kirez): the
>assumption that correlative/non-correlative relationships are
>invariant and/or linear over time.

Ten points for the first person to translate that last sentence into 
English.  Twenty points if you can express the same concept using 
longer words.  ;-)

Personally I think diversification is a good way to avoid a 
catastrophic and unpredicted loss on one of your investments.  I am 
sure that Warren would thoroughly research his investments to the 
extent where this wasn't likely.  Nevertheless if the accountants 
that put together the balance sheets are lying and the auditors don't 
pick it up then even Warren might be caught out.


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but that still only makes me wrong once."

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