The Strategy You Know and Love … Supercharged
The idea is that by owning two stocks, each of which offers an 8% average annual return, but are uncorrelated … you can earn 8% a year, but with less volatility than if you’d simply bought just one of the stocks. Same return, less volatility — that’s the “free lunch.” But what no one will tell you is this: You’ll never get wealthy if you’re too diversified. A highly diversified portfolio is great if you’re already wealthy and want to stay that way. No single investment can sink your battleship.
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