3. Diversification over Space and Time
“...It is a good idea to allocate most of my 401(k) account to my own company’s stock, since I can keep an eye on things here and the stock price has been doing really well, lately....”
—Myth #3
The famous economist John Maynard Keynes was once quoted as saying that he did not believe in diversifying his investments. He felt that the best investment strategy was to buy a few good stocks, and just hold on to them. In stark contrast, Peter Lynch, the legendary Fidelity Investments guru, is rumored at one point to have owned more than 1,000 different stocks as part of Fidelity’s mutual fund portfolio.
Keynes’s comments aside (how do you find those few good stocks?), by now it is accepted wisdom that diversifying ...
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