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Broad Global Diversification
We design investment portfolios intended to provide the broadest reasonable diversification among the numerous asset classes. We believe that this not only reduces risk but also generally increases long-term investment returns and maximizes our clients' odds of meeting their financial goals.
In a broadly diversified portfolio, the various components are not correlated, as to risk and return, with one another. This means that not all asset classes move in the same direction at the same time as to price changes. The net result is a portfolio with reduced price volatility that does not sacrifice premium returns.
We see many investment portfolios that are concentrated in one or two stocks or in a single asset class (usually large company growth stocks). Such portfolios omit small company stocks, value stocks, foreign stocks and real estate securities and are thus not properly diversified. We saw the devastation of large cap growth stocks at its worst in the 2000-2002 bear market. During that same time period, real estate and small cap value stocks produced positive returns that would have saved many investment portfolios.
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