Ackman: Investors Who Diversify Are Just Plain Lazy

Thursday, 11 Mar 2010 09:38 AM

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Pershing Square hedge fund manager William Ackman says that investment managers who focus on keeping their portfolios diversified aren't smart, they're just plain lazy.

"I think most investors overdiversify because they're lazy," Ackman said during a recent speech at the Active/Passive Investor Conference.

"Diversification covers up ignorance."

Many large investors like Ackman haven't done enough research into the companies in which they invest, Ackman claims.

“If they've got 200 positions, do you think they know what's going on at any one of those companies at this moment?” he asks. "As a result of overdiversification, their returns get watered down."

Most individual investors don’t have the expertise – or time – to build a diversified investment portfolio with the proper asset mix, notes financial writer Jason Alderman.

“That’s why most 401(k) plans and brokerages like Schwab and Fidelity offer portfolios with varying risk profiles, from extremely conservative … to very aggressive,” Alderman writes in the East Texas Review.

“Typically, each portfolio is comprised of various investments that combined reach the appropriate risk level.”

“One challenge with asset allocation is determining your appetite for risk,” Alderman points out.

“Would you lose sleep investing in a fund that might potentially lose money, or are you willing to risk temporary losses for the possibility your account may grow faster?”

“The riskier the investment, the greater its potential for financial reward over the long haul.”

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

WSJ: Republicans Could Win up to 10 Senate Seats in November

Monday, 28 Jul 2014 07:24 AM

Republicans are running competitively for 10 Senate seats now held by Democrats, heightening chances for the party to ca . . .

Analysts: Hispanic Voters Care About More Than Immigration

Monday, 28 Jul 2014 06:35 AM

To make inroads among Hispanic voters the GOP needs to emphasize its economic platform, particularly education, writes J . . .

Christie Pension Battle Called a Test for 2016

Sunday, 27 Jul 2014 22:30 PM

New Jersey Gov. Chris Christie's push for more reform of public pensions may put him to the test as he considers a 2016  . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved