Diversification

Wall Street's watchword has always been diversification, but what does it mean and why do they say it?

The standard Wall Street definition is flexible because each broker or financial planner will vary the portfolio based on your age and income. They say that the younger you are the more risk you should take and the older you are the less risk. They design a group of individual stocks, mutual funds and bonds to fit your personal profile and inclination toward risk.

For a young guy under age 35 they will put you into more high flyer type stocks, hardly any mutual funds and no bonds. As you go over 40 they start adding bonds to your mix and nearing retirement you will find a huge portion in bonds. Their goal is to have your money fully invested at all times and hope for a return of about 12% annually.

Why a little here, a little there? Because they have no idea how to make money so they hope that one segment of this hodgepodge will make enough to money to offset losses in the other area. They never look at each group separately for its performance and they NEVER tell you to sell anything at a loss so you can move into an area that is earning better profit. Wall Street brokerage houses really have no idea how to make money. Their job is to make commission. These portfolios that have been designed for all the little investors were made that way so they would not be sued by dissatisfied clients.

If you complain about poor returns they say everyone does it this way. Brokers have been taught this type of thinking for so long they think it is right and any other approach is heresy. If you want to do it differently you have to do it on your own. Why do these financial geniuses want you to be fully invested? If you had cash in your account you might take it out. And mutual fund managers never want you to take your money because they get paid by the amount of money in the fund, not on the investment return. Some investors write nasty letters to fund managers. Folks, save the postage. There is only one thing they understand - when you move your money elsewhere.

Rule One: Don't buy any individual stocks. You are not qualified and probably don't have the time to find issues that are going up. Rule Two: Buy only no-load mutual funds at a discount broker. Which ones? Only those that are going up and outperforming 99% of all other funds for the past 6 and 12 months, no longer. When they quit going up, diversify by moving your money to a better fund. Rule Three: Learn to time the market so you will not be caught in big downdrafts. Even the best funds go down then. Your broker will tell you can't do this because he doesn't know how.. It can be done. There will be times when you are 100% in cash.

These three simple rules are my answer to diversification, but will never be taught by Wall Street.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

[email protected]; 1-888-345-7870

In The News:

Here are the mutual fund favourites in April  MoneycontrolMaximum month-on-month change in value was seen in TCS, ICICI Bank and Kotak Mahindra Bank.
A young investor’s guide to mutual funds  Economic TimesMany young investors, who are barely a year or two old in their career, are eager to start investing in mutual funds. ETMutualFunds.com receive many queries on ...
Stock markets @ record high: 3 tips for mutual fund investors  Times NowNew Delhi: Stock markets grab all eyeballs when the headline equity indices hit record highs or near the previous all-time high levels. From traders to long-term ...
Large cap index mutual funds continue to outshine actively-managed large cap schemes  Economic TimesLarge cap index funds are outperforming the actively-managed large cap mutual fund schemes in the past one-year period. Kotak NV 20 ETF is topping the ...
Finance Ministry to launch ETF with bank stocks, fin institutions this fiscal  LivemintNew Delhi: The finance ministry is planning to launch an exchange traded fund (ETF) consisting of stocks of PSU banks and financial institutions this fiscal and ...
Modi 2.0: Here are top stocks picks from four brokerages  LivemintNew Delhi: Lok Sabha election was one of the most awaited events for this year. After one and half months of voting across the country, results are finally out and ...
Stocks vs Mutual Funds: Which is a Better Option to Invest?  EntrepreneurStocks and Mutual Funds have their own set of hiccups, which are better to know before making your investments.
D-Street’s mandate not clear yet, best to stagger your bets: Experts  Economic TimesThe return of the BJPled NDA government has eased political uncertainties on Dalal Street but that should not be a reason for investors to put money in stocks in ...
Reliance Capital to exit MF biz, use funds to cut debt  Economic TimesMumbai: Reliance Capital, the financial services business of the Anil Dhirubhai Ambani group (ADAG), has decided to exit mutual funds by selling its entire ...
Midcap index ready to take off for 21,879 in medium term; Buy these 3 stocks for 10-21% return  Moneycontrol.comUpmove is likely to continue as FIIs seem to be upbeat on the Indian economy and major inflow is expected from them in coming days.
Hot and Cold Stocks of Mutual Funds in April 2019  MoneylifeIn April 2019, Larsen & Toubro and Hindustan Petroleum Corporation(HPCL) were the most preferred stocks of Indian mutual funds.
Vetri Subramaniam, UTI Mutual Fund, talks about which stock segments he favours now  Economic TimesIndia's growth trajectory has been consistent over the past two decades and many firms have performed well across cycles, Vetri Subramaniam, Group President ...
How to capitalise on a soaring index  The Hindu BusinessLineWhich one should you go for — index funds or direct investing?
How concentrated is your mutual fund portfolio?  LivemintA concentrated portfolio can backfire badly if the fund manager's strategy goes wrong.A portfolio with few stocks can fall sharply if share prices of most stocks in ...
How to select best mutual fund, earn maximum  Zee BusinessMutual funds have emerged as one of the most popular options to multiply money. It has slowly gained a place in the portfolios of people as it involves less risk, ...
Markets show they're finally waking up to global wall of worry  Economic TimesThe move against Huawei has forced market participants to ditch the rose-tinted glasses.
What to buy now? Brokerages pitch over 30 stocks to ride Modi 2.0 wave  Moneycontrol.comWith the Modi government back in the saddle, the focus of the market will shift to the growth cycle, with RBI expected to be more accommodative.
What political leaders invest in: Mutual funds, Reliance shares and even Kingfisher Airlines  Economic TimesShares of Mukesh Ambani- led Relaince can be found in the portfolios of several leaders.
As market prepares for Modi 2.0, here are 13 stocks to invest in for five years  Moneycontrol.comEarly trends put NDA in a comfortable position to form the government that has, to an extent, already been factored by the market after exit polls.
Retail Investors Should Take Exposure To Midcap Stocks Through Mutual Fund Route: Ankit Jain, Mirae Asset Global Investments  BW BusinessworldIn an interview with BW Businessworld, Ankit Jain, Fund Manager, Mirae Asset Global Investments (India), talks about Consumption led funds, lending rates and ...
MF holdings of auto stocks at record low: Motilal Oswal study  BusinessLineMutual funds' holdings of auto sector stocks stood at a record low in April, finds a study by broking house Motilal Oswal Securities. The weightage of the auto ...
How Vanguard Patented a Way to Avoid Taxes on Mutual Funds  BloombergControversial heartbeat trades help the funds avoid taxable gains.
Stay away from stock tips  LivemintIf taming the stock market was easy, everyone would do it.Losing money in market is real and facing volatility is part of the deal.
Politics of investing  Telegraph IndiaInvestments become volatile during elections; the trick is to focus on your goals.
Holding of mutual funds in private lenders at a fresh high in April  Business StandardThe holding of mutual funds (MFs) in private banks saw its weightage increase to a new high of 19.3 per cent in April — the seventh straight month of increase.
Investors Try Stock Picking as Volatility Rises  The Wall Street JournalSharp equity swings have caught the attention of some individual investors who believe the market has reached a point where picking the right individual stocks ...
7 Smart Mutual Funds for Income Investing | Dividends  U.S. News & World ReportThese funds offer management and strategy rather than following a specific index.
Equity funds record highest ever exposure in banking stocks in March 2019  Business TodayAs per the latest data available from the SEBI, overall deployment of equity funds in bank stocks grew around 52 per cent year-on-year (y-o-y) in the month ...
More active managers are beating the stock market again thanks to the trade war: Goldman Sachs  MarketWatchActive stock pickers are having one of their best years since the financial crisis, and these money managers can thank rising U.S.-China trade tensions for their ...
What Type of Mutual Fund Schemes Should You Invest in? Know Here  News18Equity funds are mutual funds which invest majorly in equity stocks of listed companies. They are considered to be risky but they tend to give higher returns in the ...
FPIs pull out Rs 4,375 crore in May so far  Economic TimesNEW DELHI: Foreign investors have pulled out a net amount of Rs 4,375 crore from the Indian capital markets in May so far, driven by global and domestic ...
For new investors, starting SIP in Nifty50 and Nifty Next 50 is ideal: HDFC Securities  Moneycontrol.comFor *fresh* investors, starting with SIP in Nifty 50 and Nifty Next 50 is ideal. On the way, they have to learn about evaluating stocks and their valuations, Deepak ...
These new retirement tips can improve your saving and spending decisions  MarketWatchBest New Ideas in Retirement series offers solid, straightforward help with your plans.
Mutual Fund Update: Stocks that attracted fund managers in April 2019  Dalal Street Investment JournalIf we look at the March 2019 data, then the energy sector was the one that featured on top of the buying done by the fund managers. However, the story in the ...
Invest in These 4 Thrivent Mutual Funds for Great Returns  Zacks.comBelow we share with you four top-ranked Thrivent mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy)
Liquidity Scare: NBFC stocks slide on fears of spillover  Economic TimesAny default or downgrades in NBFC space will have a cascading impact on the entire sector.
Stop! Too many stocks, mutual funds are not good for you; Buying too many may not get you more  The Financial ExpressHandling the overall risk of investments is crucial, but not at the cost of not meeting your financial goals. Over-diversification can do this.
Golden Cross | Midcap and small cap indices are set for fresh bull trend, says ICICI Direct  Moneycontrol.comNifty midcap and small-cap indices are witnessing the Golden Cross phenomenon, indicating a bullish shift in trend direction, along with the maturity of 14-month ...
Forget Warren Buffett: This fund manager has walloped the stock market over the past decade  MarketWatchWhen the “Woodstock of Capitalism” took place a few weeks ago, aka Berkshire Hathaway's BRK.A, -0.37% BRK.B, +0.19% annual meeting, the Warren Buffett ...
Bech de kya? How to answer this question in stock market  Economic TimesThe phone rang. And I was not surprised. This name always lights up my phone screen when the market hits a new level – high or low. And the question is ...
A Look At How To Ride Out Stock Market Storms  NPREscalating trade wars and volatile markets cause some investors to make hasty decisions that can lead to financially damaging decisions. But there are ways to ...
People Want to Buy Uber Stock  Bloomberg“Uber IPO Is Oversubscribed by Day Two of Roadshow,” it says here, but I would say that Uber Technologies Inc.'s initial public offering was oversubscribed by ...
3 Mining Stocks for Investors Seeking Gold Exposure  ETF TrendsAs the U.S.-China trade spat drags on, so too could the stock market volatility that has accompanied it so far this month.
China Stocks at the Mercy of Foreigners Like Never Before  BloombergThe record pace of foreign selling in China's equities matters now more than ever. While overseas traders are quickly souring on yuan assets, they've also never ...
How to Find “Pre-IPO” Marijuana Stocks  Investorplace.comYesterday, we began a special two-part series from Matt McCall, editor of Early Stage Investor. In Saturday's essay, Matt discussed how getting in early and ...
What Makes Berkshire Hathaway Shares Better Than an Actively Managed Mutual Fund?  Motley FoolTo start with, the company is a lot more than Warren Buffett's carefully selected stock portfolio.
FOMO? Investors Fear Missing Out As Companies Stay Private For Longer  Seeking AlphaMany companies are staying private for longer before deciding to go public - if they do so at all. But what does that mean for investors? The type of gains many.
Best And Worst Q2 2019: Technology ETFs And Mutual Funds  Seeking AlphaThe Technology sector ranks eighth in Q2 2019. Based on an aggregation of ratings of 430 stocks in the Technology sector. TDIV is our top-rated Technology ...
Top 10 stocks that mutual fund managers bought and sold in March 2019  Moneycontrol.comData for equity flows into mutual funds for March came as a breather after a weak February. An increase in net inflows in equity and income category led to the ...
Stocks post decade-high weekly gains  DAWN.comKARACHI: Investors heaved a sigh of relief as the stock market posted recovery after snapping the seven-successive-week selling spree that had seen the ...
What India's top three mutual funds bought and sold in March  Economic TimesIndias largest money manager held 1.5 trillion rupees in equities.
Can mutual funds give multibagger returns like stocks?  Economic TimesStocks can be multibaggers. They can offer extraordinary returns in a very short period. Can mutual funds ever do that? This was a question thrown at Rajeev ...
Govt tweaks rules, increases limit to disclose investment in stocks, mutual funds for employees  Economic TimesNew Delhi: The Centre has increased the over 26-year-old monetary limit on disclosure of investment in shares and mutual funds by employees to six months of ...
I want to invest Rs 1 crore in stocks and mutual funds for 5 years. How should I invest?  Economic TimesYou may consider the following asset allocation: 40% in large-caps; 40% in large and mid-cap, or multi-caps; and remaining 20% in mid- and small-cap funds.
Kiplinger's Personal Finance: Vanguard is offer new fund focusing on environmental, social and governance characteristics  Richmond.comIn another sign that sustainable investing is here to stay, Vanguard announced it would launch its first actively managed fund with a focus on environmental, ...
Active mutual funds fail to reflect index gains  Economic TimesThe Nifty, which has hit all-time highs for the second time in April, has advanced 12% in the last one year. But these gains are yet to reflect in many mutual funds' ...
7 stocks most favoured by mutual funds over last one year  Economic TimesAs the markets hit a speed bump, stocks favoured by mutual funds appear to be safer bets.
Wall Street Isn’t Buying What Silicon Valley Is Selling  The Wall Street JournalVenture capitalists who pumped billions into the largest startups bet that the stock market would embrace them too. Public investors have been less than ...
Put Canada's "Secret Pot Weapon" to Work for You  Money MorningAmerican cannabis markets get a lot of attention from investors, and deservedly so. As far as legal markets go, the various U.S. states constitute the largest in the ...
Mutual funds or direct equity investment – which is better?  Economic TimesOne big question that often dogs investors is which investing option should they opt for: mutual fund or direct equity? Katalyst Wealth's Ekansh Mittal ends your ...
Mutual Funds increase holding in ‘attractively valued’ oil & gas stocks  Economic TimesMUMBAI: Mutual funds have been adding shares of oil and gas companies such as GAIL, HPCL, BPCL and ONGC over the last few months, encouraged by ...
Mutual funds shooting themselves in the foot?  Economic TimesWhat if banks take a leaf out of Kotak and HDFC Mutual Funds' decision to direct investors to come another day to get their money instead of paying them on the ...
Mutual funds bet big on these 30 stocks in November; do you own any?  Moneycontrol.comThe Indian equity market rose about 5 percent in November but what was more heartening to see was inflows into mutual funds. Investors pumped Rs 1.4 lakh ...
Mutual funds sell several blue chips stocks, buy mid-caps in March  Business StandardDomestic money managers were seen pruning their holdings in several blue-chip stocks, including Reliance Industries (RIL) and Housing Development Finance ...
What top 5 money managers bought and sold in February  Economic TimesFebruary was the fourth consecutive month of decline in net investment into equity mutual funds.
Quantum Mutual Fund uses cash pile to buy stocks cheap  Economic TimesQuantum Long Term Equity Value Fund, where value investing is the pronounced fund allocation theme, has brought down the level of cash at its plan to the ...
27-year-old rule changed: Disclosure limit on MF, stock investment up for bureaucrats  Economic TimesGroup A and B officials had to intimate government if total transaction in shares or MFs exceeded Rs 50K.
Here’s a better tool to judge mutual fund performance than simple 1-year, 3-year returns  Economic TimesOne invests in mutual funds to earn potentially higher returns than those in traditional investment products, and I'm sure everyone looks at the one-year, ...
Why your core equity portfolio should be in index mutual funds  Economic TimesInvestors flock to the performing fund “after” it has beaten the index. Fund selection is not an exact science, and there will be hits and misses.
What top mutual funds bought and sold last month  LivemintMumbai: Inflows into Indian equity mutual funds in January were the smallest in two years as heightened market volatility and political uncertainty cooled ...
Should I increase investments in mutual funds once I have more money to invest?  Economic TimesI am a 19-year-old student. I want to invest Rs 2,500 per month in mutual funds for 7-8 years. Can I increase the investment amount with time—once I have more ...
These are fertile grounds for long-term stock pickers, says Samir Rachh of Reliance Mutual Fund  Economic TimesSmall cap funds are going through a rough patch after a bull run in 2017. etmutualfunds.com spoke to Samir Rachh, fund manager, Reliance Small Cap Fund, ...
Check out what top five mutual funds bought & sold during October selloff  Economic TimesNEW DELHI: Mutual funds stood resilient as industry's asset base increased to Rs 22.23 lakh crore in October in spite of a heavy correction in the domestic ...
New SIP investors feel the pain as equity fund returns disappoint  Economic TimesSip by sip: That's how the average Indian had a taste of equities in the past couple of years. But the steady road to riches, which involved monthly mutual fund ...
Invested in the FTSE 100? Be prepared for low returns  Motley Fool UKHave the bulk of your retirement savings in FTSE 100 (INDEXFTSE: UKX) stocks? That could be a dangerous strategy, says Edward Sheldon.
Mutual funds garner over Rs 65,000 crore in Jan  Economic TimesMUMBAI: The mutual fund industry added assets worth Rs 65,439 crore in January 2019, taking total assets under management to Rs 23.37 lakh crore.
Why it is a bad idea to always look for outperformers while investing in mutual funds  Economic TimesOne of the most important features that any investor, wealth adviser or anyone in the financial media looks for in an investment product is its track record in ...
Mutual funds may need smart bets on smallcap stocks to beat ETF show  Economic TimesSmallcap stocks could see up to ₹1 lakh cr inflow as fund managers look for potential winners: Analysts.
How stocks picked by mutual funds over 2014 to 2017 have performed  Economic TimesWhile the most wanted stocks of 2014 and 2015 have done well, the recent picks have disappointed.
Diversify equity portfolio with international funds  Economic TimesAs a part of diversifying your equity portfolio, wealth managers believe investors should diversify geographically using mutual funds. They can do this by ...
Debt mutual funds with Zee exposure send investors into a tizzy  Economic TimesMUMBAI: Worries about the prospects of debt mutual funds holding securities of Subhash Chandra's Essel Group entities have resurfaced after Kotak Mutual ...
How income from stocks and mutual funds are taxed for an individual  Moneycontrol.comCapital gains from transfer of unlisted share are considered as STCG where period of holding is less than or equal to 24 months, and LTCG when holding period ...
Top 30 stocks that fund managers bought & sold in March; do you own any?  Moneycontrol.comData for equity flows into a mutual funds for March came as a breather after a weak February. Increase in net inflows in equity and income category led to the ...
BJP’s Amit Shah has diversified stock investment portfolio; Rahul Gandhi prefers mutual funds  Economic TimesShah held shares worth Rs 17.56 cr as of March 22, while Gandhi has MFs worth Rs 5.19 cr.
Three large mutual funds opposed to L&T’s takeover of Mindtree  Economic TimesMUMBAI: Three large mutual funds holding shares of Mindtree are opposed to L&T's hostile takeover attempt of the mid-sized software company.
Mutual funds' exposure to banks hits 3-month low of Rs 1.88 lakh crore in Sept  Economic TimesMutual funds' holding of banking stocks declined by over Rs 21,600 crore to Rs 1.88 lakh crore in September, driven by the correction in equity markets.
5 funds that outperformed the recent surge in Nifty returns  Economic TimesEquity markets have seen a strong rally on the back of strong flows from foreign investors and hopes of the NDA-led coalition coming back to power. The Nifty ...
Financial planners recommend new fund from Mirae Mutual Fund  Economic TimesConsistent performance of the existing equity mutual fund schemes at Mirae has prompted financial planners to suggest the Mirae Asset Focused Fund to ...
Flows to equity mutual funds rebound as rally spurs risk appetite  Economic TimesStock funds took in about 118 billion rupees ($1.7 billion), the highest since October.
What India's top three mutual funds bought and sold in February  LivemintMUMBAI: Inflows into Indian equity mutual funds in February were the smallest in more than two years as savers held back investments amid market volatility ...
At least 100 MF schemes own these stocks; that should mean something, right?  Economic TimesDomestic institutional investors have become one of the key market drivers in recent years.
What India's top three MFs bought and sold in January  Economic TimesStock funds took in a net Rs 6160 crore, the least since January 2017.
Top fund houses are busy lapping up PSUs; what’s behind this new-found love  Economic TimesNEW DELHI: India's top three mutual funds, which manage over Rs 9 lakh crore in debt and equity assets, added a number of PSU stocks to their schemes in ...
Should you shift from large-cap mutual funds to index funds?  Economic TimesThe index fund category of mutual fund schemes is slowly gaining traction among investors. The fortunes of index funds are changing as not only are they being ...
Best small cap mutual funds to invest in 2019  Economic TimesHere is the monthly update on our recommended small cap mutual fund schemes. We are happy to inform you that there are no changes in the recommendation ...
The road to wealth creation is paved with smart investments  Economic TimesEquity, hands down, is the best asset class to help you create wealth.
These stocks see mutual fund inflows for 8th straight quarter; are they worth a look?  Economic TimesAt least 20 listed stocks on the BSE have been major beneficiaries.
Is it time to invest in mid cap and small cap mutual fund schemes?  Economic TimesMany market pundits believe this is the right time to enter in small cap and mid cap segments.
Sebi issues new format for mutual funds' monthly report  Economic TimesFrom April 2019 onwards, AMCs will have to submit the MCR to Sebi in the new format by the third working day of each month.
Quant-based mutual fund schemes are coming. Should you invest?  Economic TimesMany mutual fund advisors believe quant-based mutual funds are the future of the Indian mutual fund industry.

Investment Attorneys and Garbage Stocks

How is it possible that trash Companies are posting less... Read More

Hedge Funds: the Good, the Bad, and the Ugly

Alfred Winslow Jones started hedge funds in 1949. He was... Read More

Its Better

Question: How does it get better when it gets worse?Last... Read More

The 401(K): How The Insider Has Stolen Your Retirement!

Mutual funds were moderately successful in creating a presence in... Read More

How to Read an Annual Report

Every publicly traded company is required by the SEC(Securities and... Read More

Humpty Dumpty the Stock Market Falls Down

Humpty Dumpty had a great fall and all the King's... Read More

Dont Fight The Fed

One of the great truisms of Wall Street is "Don't... Read More

Forces that Move Stock Prices

Among the largest forces that affect stock prices are inflation,... Read More

Pamplona, the Wild Investment Bulls

You remember (they show it on TV every year) the... Read More

Direction

It is difficult to make money in a bull market,... Read More

Emotional Maturity

If you are going to be a winner in the... Read More

Understanding Stock Market Indexes

A stock market index is a statistical measure of changes... Read More

Good News?

As the man said, "I've got some good news and... Read More

Jack and Jill

Jack and Jill went up the hill to fetch a... Read More

How to Find Value in No Load Mutual Fund Investing

What are you thinking when it comes to your no... Read More

Picking Mutual Funds to Outperform the Market

With over 6,000 mutual funds available, it may be tempting... Read More

The Secret to More Winning Trades is as Simple as Avoiding This Common Mistake

If you're a normal human being, your need to feel... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

Which Way The Market

I am hearing predictions by brokers, financial planners, talk show... Read More

?Fears Only Enemy Is Action?

What a great statement!I just heard someone use it in... Read More

True Investment Road Maps

If you don't know where you are going any road... Read More

War Market

There is no question that the stock market is being... Read More

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

Invest In The Stock Market For The RIGHT Reason, Using The RIGHT Choices

Invest in the stock market for the RIGHT reason, using... Read More

A Stock Market Investment Plan that Never Lets You Down

The bulls and bears of the stock market are both... Read More