Diversification

[Chinaman]

no diversification, no balancing, no investment ....not buying anythings.

time to keep cash.....if you are lucky can buy 30% cheaper, if u control your emotion well.....

the world is always uncertain....sure somewhere and some events will trigger in one part of the world.
This is life, so market always have boom and bust....in order to get rick 1 must take abit risk and well also need luck.

[winston]

TOL:-

Did your diversification strategy, managed to protect you, during this 2 months plunge ?

[winston]

How Investors Can Diversify When Markets Move Together
By Jeff Cox

When it comes to combating financial markets that all seem to move in unison, the options are getting so limited that some are questioning whether stock picking is a dying art.

The 10 sectors on the Standard & Poor's 500 [.SPX 1224.58 20.92 (+1.74%) ] have been moving together up or down 95 percent of the time, according to ConvergEx.

US stocks are tied to the euro's movement 81 percent of the time, while even the least correlated S&P sector — utilities — is still highly correlated.

Shelter from the storm has come from only a few asset classes, with gold and other metals most prominent among them.

Over the past 30 days, the correlation of gold to the stock market is actually negative-24 percent, while silver has just a 25 percent correlation.

Investment-grade — top-quality — bonds also have proven effective, as they generate cash and have resisted the gyrations of the market to continue on a fairly linear path.

Using the iShares iBoxx Investment Grade Bond ETF as a proxy, Colas found that the fund has a negative-25 percent correlation to the S&P 500, meaning it "is the only asset class aside from precious metals that meaningfully helps diversify financial portfolio risk at the moment."

Among S&P sectors, Colas found that utilities have a correlation of 85 percent.

"If there is one central takeaway, it is that the certainty of cash flows from either utilities or high quality corporate bonds is currently the best way to buy diversification," Colas said.

"The only thing that's acting relatively uncorrelated is the dividend stocks," says Michael Cohn, chief market strategist at Global Arena Investment Management in New York.

"If you're afraid of being left out of a rally, you have to be buying the stuff that's yielding over 3.5 percent. Complete opposite correlation is coming from the Treasury funds, but I can't really justify going out on the curve for a yield that's under inflation."

http://www.cnbc.com/id/44892053

[winston]

CHART OF THE WEEK: THE REASON YOU'RE PROBABLY NOT DIVERSIFIED AT ALL

Stocks plummeted in August. They traded sideways in September. They've rallied in October.

And so has everything else. That's the idea behind our chart of the week.

Many people take a position in commodities like crude oil, copper, and corn with the idea that they're diversifying their portfolio.

And often times, that's a reasonable idea. But not now. Almost every conventional asset you can think of has become bundled together in a huge "risk on, risk off" trade.

Stocks, commodities, and even real estate stocks are moving in the same up-and-down fashion, at the same rate.

For a picture of this "correlation," note the chart below. It plots the performance of stocks (blue line), commodities (black line), and commercial real estate stocks (red line).

As you can see, the "risk on, risk off" trade advanced early this year. It was clobbered during late summer/early autumn.

It is rallying now. Keep this incredibly important correlation idea in mind when attempting to build a diversified portfolio.

www.dailywealth.com

[winston]

If you believe a balanced portfolio is best, hold gold, bonds, blue-chip stocks, REITs and yuan.

Source: Dr Check, The Standard HK

[winston]

The Ascendence of Sociopaths in US Governance by Doug Casey

An International Man lives and does business wherever he finds conditions most advantageous, regardless of arbitrary borders.

He's diversified globally, with passports from multiple countries, assets in several jurisdictions and his residence in yet another.

He doesn't depend absolutely on any country and regards all of them as competitors for his capital and expertise.

The best way to do that is by diversifying your assets internationally. Allocating your wealth into real assets. Linking up with sound, like-minded people who share your values. And staying alert for the high-potential speculations that inevitably arise during chaotic times.

http://www.caseyresearch.com/articles/a ... 420ED0312B

[winston]

Five Ways To Protect Yourself From The Coming Financial Crisis

Firstly, people should always diversify. There is no point in putting all your savings into one thing.

It’s a golden rule to spread out your money to protect it from bad luck or a single bad call.

So where can you hide from high inflation?

http://www.forbes.com/sites/investor/20 ... -crisis/2/

[winston]

Diversify your bets in times of uncertainty

Keep diversifying your money evenly into yuan bonds or deposits, gold, higher-yield Hong Kong corporate bonds, the US dollar or Hong Kong dollar cash, and dividend-paying equities.

You can set aside 10 percent of your portfolio for bargain hunting in Hong Kong stocks, aiming for a short-term 10 to 15 percent trading profit, when the Hang Seng Index corrects to 18,300.

But remember: don't be too greedy.

Source: Dr Check, The Standard HK

http://www.thestandard.com.hk/news_deta ... 20528&fc=1

[cif5000]

A note on the attack side since we heard so much on the defense.

"If your portfolio is stagnant or going down while the rest of the market is moving up, it just means that you are not making use of diversification." - cif5000

[winston]

THE "RISK ON, RISK OFF" TRADE IS STARTING TO BREAK by Larsen Kusick

One of the biggest trends in the market is showing signs of easing.

Over the past few years, we've noted the extreme "correlation" between stocks and commodities. Since the 2008 financial crisis, different asset classes have moved together in lockstep, making it difficult for investors to diversify their portfolios. In other words, stocks and commodities have been joined at the hip in one big "risk on, risk off" trade.

We've kept tabs on this trend by noting the tight relationship between the S&P 500 and the CRB Index. The CRB Index holds a basket of 19 different commodities, including crude oil, corn, soybeans, sugar, cattle, gold, silver, copper, coffee, cocoa, natural gas, cotton, and aluminum.

As recently as last December, the "risk on, risk off" trade was going strong. But as today's chart shows, stocks have pulled away from commodities over the past 12 months. The correlation is breaking down.


Source: Daily Wealth