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TOPIC: Modern Portfolio Theory - Is is still a good way to diversify your portfolio or is it "passe"?

Modern Portfolio Theory - Is is still a good way to diversify your portfolio or is it "passe"? 1 year 7 months ago #1

  • FrankN
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Joker wrote:
The idea of Modern Portfolio Theory is to have stocks, bonds (which move in the market adversely), Mutual Funds, etc. I read that book and it said that you don't ever want to be without profit no matter which part of the market is down stocks or bonds. You always want to cover your back so if your main stock takes a dive, you can rely on MFs and Bonds to fill in at least part of the gap. What I wish I could remember is the percentages for each type. I do remember that it all depends on your risk tolerance.

It does, and now it includes alternative investments as well (if you have the risk tolerance).
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Modern Portfolio Theory - Is is still a good way to diversify your portfolio or is it "passe"? 1 year 8 months ago #2

  • Joker
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The idea of Modern Portfolio Theory is to have stocks, bonds (which move in the market adversely), Mutual Funds, etc. I read that book and it said that you don't ever want to be without profit no matter which part of the market is down stocks or bonds. You always want to cover your back so if your main stock takes a dive, you can rely on MFs and Bonds to fill in at least part of the gap. What I wish I could remember is the percentages for each type. I do remember that it all depends on your risk tolerance.
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Modern Portfolio Theory - Is is still a good way to diversify your portfolio or is it "passe"? 1 year 8 months ago #3

  • Lexie
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Without being up on any of the investments strategies, I would think it would be better to diversify. I've never been one to put all my eggs in one basket but if your money is spread out, it could make more in one place that in the other. Am I wrong on this?
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Modern Portfolio Theory - Is is still a good way to diversify your portfolio or is it "passe"? 1 year 8 months ago #4

  • Joker
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Several years ago I worked as an Operations Manager of an investment firm. The education they gave their clients was Modern Portfolio Theory. It is a way to moderate risk in your portfolio and diversity correctly (by watching the movements of stocks and bonds). Is this still a good model to use today? Or, is there some other theory that is more up-to-date?
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