Long Term Investing
Posted by admin in Investing
29Mar
I guess Easter got me thinking about eggs and baskets. My kids like having all their Easter eggs in one basket, it creates an impressive appearance especially considering all the chocolate waiting inside.
But investors should never have all their eggs in one basket. Consider this:
Nasdaq 2000-2002 lost 78% ($500,000 became $110,000)
Dow Jones Industrials 1929-1932 lost 89% ($500,000 became $50,000)
Very few people could sit calmly through those types of losses. Of course, those types of losses assume you have all your eggs in one basket. Assuming you have a long time horizon to invest, your philosophy should be more along these lines: To periodically rebalance a diversified portfolio of noncorrelated investments.
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