The Many Sides of Diversification | Spreading Your Bets Across Stocks, Factors and Asset Classes
Two Quants and a Financial PlannerSeptember 25, 202300:52:20

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

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.

#diversification #investing

00:00 - Intro
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

ABOUT THE PODCAST
Learning how to be a financial planner is one thing. Doing it is another. Follow along with new financial planners Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau) as experienced veteran Matt Zeigler (@cultishcreative) helps them navigate the complex world of financial planning and learn about the most important topics that impact all of our financial futures. From investments to retirement to college planning to estate planning to insurance and beyond, we will cover the major financial planning issues that impact all of our lives and will provide a framework to help investors tackle them. We hope you will join us on our learning journey.

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