Wednesday, July 8, 2009

Did Diversification Fail When We Needed It Most?

Ken French talks about diversification

Ken argues that the observation that correlations across asset classes went up recently is "probably a mis-perception". He argues that really what is happening is that the market component of risk became more significant, and to the extent that all assets have a market component, they will all be affected by this component.

However, at the end of the day, for an individual investor this is probably semantics. Pretty much everything went down!