Diversification: Reducing Risk But Limiting Profit

Diversification is another concept that need to be really understood by all investor. By using diversification you are certainly reducing exposure to the risk of individual item. And this is a good thing to do. But on the other side of the coin, if you are using too much diversification, not only you induce additional transaction cost, but also you are limitting your profit that you could earn. Let’s found out exactly why and how it works

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