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Empowered Investor: A Guide to Building Better
Portfolios by Keith Matthews
Price $15.95>> 
 Investment
Principle #2: Diversify
Diversify Your Wealth Amongst Different Asset Classes
Most North Americans know that diversification is important. The
problem is that we all want to be diversified, as long as we are
diversified in the top ten funds in the two hottest sectors, or
in 10 individual stocks that all have positive returns.
Truth be told, this way of thinking is human nature, and was also
the prevalent method of investing in the early 1900s. In fact, right
up to the mid-’50s, the leading investment guides recommended
that investors find a few individual stocks with the highest expected
investment returns, invest in them, and ignore all other factors.
At that time, Harry Markowitz, a young graduate student at the
University of Chicago, dared to think differently. He believed that
investors should be equally concerned with the risks or volatility
of the investments as they were with the returns of investments.
Markowitz’s conclusions created a movement that changed the
way people think about investing.
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