Why We Diversify
by Eddy Elfenbein, Crossing Wall Street
On Friday, Microsoft (MSFT) dropped 7.17% thanks to its earnings report. Personally, I didnât think the earnings report was that bad but Iâve learned that itâs hard to argue with a market thatâs out for blood.
Despite the big hit from Microsoft, I was pleased to see that our Buy List slightly outperformed the market on Friday. This is a good lesson on why diversification is so important.
Roughly speaking, MSFT was a 36-basis-point drag on the whole portfolio (7.17% divided by 20; thatâs not exact but itâs good enough for our purposes).
On Friday, the S&P 500 gained just under half a basis point so it rounds to being flat for the day while our Buy List gained 0.03%. A strong portfolio is like a well-rounded sports team â on any given day, youâll never know who the hero will be.
Copyright Š Crossing Wall Street
