No. of Recommendations: 4
>>Check out this study by Dr. William Bernstein.

The 15-Stock Diversification Myth
http://www.efficientfrontier.com/ef/900/15st.htm

In order to investigate this problem, I looked at the stocks constituting the S&P 500 as of 11/30/99, and formed 98 random equally-weighted 15-stock portfolios for the 12/89-11/99 10-year holding period. Below is a histogram of the annualized portfolio returns:

</snip>

Astonishingly, 69 of the 98 randonly selected portfolios Bernstein examined beat the S&P500 annualized return of 18.94% per annum for that 10 year period. Hard to see how that's bad and something to be avoided.<<


I'm confused. The article you link to explains exactly why it's something to be avoided.

Soooz
Who vaguely recalls seeing this same snippet cited before to support exactly the opposite conclusion that Bernstein draws in the article
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.