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Portfolio diversification.

Sunday, October 17, 2010

An email from another reader:

Hello AK

I was thinking about the investment portfolio and its exposure to the various countries and sectors.

S-REIT is good for the high dividends payout but I feel that there will be a time that I will have a high exposure to the property sector.

While the % of sector/counters per $10,000 to be invested is up to individual, what will be a recommended spread of counters that we could look at for portfolio diversification.

Note that I am still newbie to FA (still dunno what 200dma means) and will not watch the market like a hawk for the buy-sell quick profits.

Your thoughts appreciated.


My reply:

Hi J,

My strategy is quite simple.

-There is a time to buy and a time to sell. When I hit my targets, I sell.
-If I cannot find any bargains, I don't buy.  I keep cash until bargains present themselves.
-I try not to be vested in too many sectors/countries for the supposed safety that would come from diversification. In fact, I would be burdened with the need to monitor too many things.

Just my way. ;)

Best wishes,
P.S. 200dMA is "200 days moving average" and is part of TA, not FA.

Related post:
Risks and rewards: TA and FA.
Conspiracy of the Rich.


Anonymous said...

Thank you AK. Your reply is well appreciated here.


AK71 said...

Hi SnOOpy88,

Most welcomed. I ran out of ideas for new blog posts and thought it is a good idea to share some of my recent email exchanges with readers. ;)

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