Only if the assets are uncorrelated and independent. Otherwise diversification o... | Hacker News

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confluence on Oct 26, 2012 | parent | context | favorite | on: Amazon Reports First Quarterly Loss in 4 Years

Only if the assets are uncorrelated and independent.

Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).

Someone on Oct 26, 2012 [–]

Not "Only if the assets are uncorrelated and independent", but "As soon as the assets are not 100% correlated".

That is a huge difference. The dot com bust affected (almost) all tech stocks, but they didn't all go bankrupt.

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