Diversifcation: good but not as good as you probably think

Index cohesive force (Photo credit: Wikipedia)


For years (at least since 2001) this idea has been a
mainstay in my classes.  The benefits of diversification have been
overstated.  Why?  The correlations that are used to diversify and get
the so called optimal portfolio change and the change is NOT in a random format:
the correlations go up in bad times.


The Physics of Finance: Why