Here’s the holy grail of investing: Find 15 good, uncorrelated return streams.
If you look at the math of diversification, getting out to 15 uncorrelated streams allows you to reduce about 80% of your risk without reducing your return. That increases your return-to-risk ratio by a factor of five—giving you the upside without the downside.
Credit: Sam Parr, Shaan Puri, and @myfirstmilpod
#RayDalio #Investing #Diversification #FinancialWisdom
If you look at the math of diversification, getting out to 15 uncorrelated streams allows you to reduce about 80% of your risk without reducing your return. That increases your return-to-risk ratio by a factor of five—giving you the upside without the downside.
Credit: Sam Parr, Shaan Puri, and @myfirstmilpod
#RayDalio #Investing #Diversification #FinancialWisdom