Traditionally, when we discuss the concept of a highly concentrated portfolio, we talk about risk. As we know, putting all of your eggs in one basket means a single mistake can be very devastating. What is often less emphasized is how a concentrated portfolio will most likely underperform a diversified portfolio over time, and how this can negatively impact an investor's financial goals. How can we say that a concentrated portfolio will most likely underperform? After all, we don’t have a ... [Continue Reading]
Articles and resources related to Diversification.
“If you can predict the future, you shouldn’t worry about being diversified” – Greg Carlson, CCM CEO and Co-Founder Diversification has many benefits for investors when utilized appropriately. A diversified portfolio can have lower volatility, higher returns and increase the probability of a successful retirement. Because portfolio diversification is so universally accepted and often coined as ‘the only free lunch in investing,’ people frequently assume that it will only have a positive ... [Continue Reading]
The reinsurance business is rapidly growing in size and popularity as investors are attracted to the return potential and risk diversification that this asset class can deliver. Total issuance of catastrophe bonds has tripled over the past five years, which has some investors worried that the traditional 16% annual returns of the asset class may no longer be achievable. Berkshire Hathaway owns some of the largest companies in this industry and their chairman and CEO, Warren Buffet, has recently ... [Continue Reading]
Over the past eighteen months, we’ve witnessed a historical collapse in oil prices driven by a tremendous increase in supply and lackluster global demand. The implications of such a dramatic fall in oil prices are wide ranging. Here in the U.S., we’ve seen many small oil companies fall into bankruptcy, but it’s the largest oil producing countries that have been most impacted by the decline in oil revenue. Saudi Arabia ran a budget deficit of 16% of GDP in 2015 and has even considered publicly ... [Continue Reading]
Following today's news of the UK's 'yes' vote to leave the EU, we recommend the following article from our partner, Dimensional Fund Advisors, for some additional context on the situation. Also please see today's post, An Update to CCM Clients: Market Conditions due to Brexit, by CCM Director of Investments & Research, Adam Hoffmann. *** UK’s EU Referendum Result On June 23, citizens of the United Kingdom voted to leave the European Union. While there has been much speculation leading ... [Continue Reading]