NO CLASS ON MONDAY SEPTEMBER 3 NO CLASS ON WEDNESDAY SEPTEMBER 5 QUIZ #1: DATE STILL TO BE DETERMINED

Diversification

What does diversification mean to you?

Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. It is the spreading out investments to reduce risks. Because the fluctuations of a single security have less impact on a diverse portfolio, diversification minimizes the risk from any one investment. Wikipedia A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated. Investopedia A portfolio strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, and real estate, which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes or industries or individual companies move up and down in value at the same time or at the same rate. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions. InvestorWords.com

You want to diversify your portfolio. What might you invest in to achieve this?

What is market timing? Does it work? – T how the market is going to move and then taking action based upon your – N to pursue. Why? Studies have shown that. It is kinda like arriving late to the game. Does diversification work? Early 2009 : all market sectors felt steep declines. Is 2012 a good year to be in the stock market? –

Reflection #2: Diversification Pick an age range (20s, 30s, 40s, 50s, 60s) For that particular age range, develop an asset allocation model – What categories would you suggest that someone invest in? Specific funds/stocks ARE NOT to be mentioned: USE CATEGORIES – What percent of their money should be invested into that particular category (all %s must add up to 100%) – Explain the logic behind your model (how and why did you come up with this particular model?) Type this up in a word processing file. Keep Post this same information to the class wiki. Must be submitted by 3:00pm on Thursday August 30.

To be completed by Wednesday Reflection #1 (must be submitted via the class wiki by 3pm on Tuesday September 7) Tutorial #3