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The Many Sides of Diversification: Spreading Your Bets Across Stocks, Factors and Asset Classes

Posted September 27, 2023 at 9:45 am

Validea Capital Management

The idea of diversification is simple. Most investors understand that spreading your bets and avoiding overconcentration is a good idea. But the details behind how to do that can be much more complicated. In this episode, we take a deep dive into diversification. We look at the number of stocks a portfolio needs to be diversified, the importance of factor diversification, whether a portfolio with only stocks and bonds can be considered properly diversified and why rebalancing is an essential part of diversification.

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  • 00:55 – The different ways to look at diversification
  • 03:04 – How many stocks do you need to be diversified?
  • 05:01 – Systematic vs. idiosyncratic risk
  • 07:23 – The linkage between behavior and diversification
  • 10:43 – The importance of factor diversification
  • 20:09 – ESG and the importance of understanding what drives stock returns
  • 24:53 – Is Justin diversified?
  • 29:49 – Can a portfolio with just stocks and bonds be diversified?
  • 41:46 – Why rebalancing is essential for diversification

Originally Posted September 25, 2023 – The Many Sides of Diversification: Spreading Your Bets Across Stocks, Factors and Asset Classes

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2 thoughts on “The Many Sides of Diversification: Spreading Your Bets Across Stocks, Factors and Asset Classes”

  • Robert Munzner

    I don’t want to listen. I want to read.

    • Interactive Brokers

      Hello Robert, unfortunately there is no transcript for this podcast/ video. We appreciate your interest in creating a transcript and have passed on your recommendation to the appropriate team.

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Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Validea Capital Management and is being posted with its permission. The views expressed in this material are solely those of the author and/or Validea Capital Management and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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