Diversification

“The Benefits of diversification are clear. Portfolio theory has played a crucial role in explaining the relationship between risk and return where more than one investment is held. It also enables us to identify optimal and efficient portfolios.”

Buffett challenges the conventional wisdom regarding diversification. He argues that holding a few good stocks is far more important than spreading funds across a broad number of stocks. It is a fact that investors have been so oversold on diversification that the fear of having too many eggs in one basket has caused them to invest very little into companies about which they thoroughly know and far too much into others about which they know nothing at all. It is a dangerous thing to do as buying a company without sufficient knowledge may turn out to be even more dangerous than having adequate diversification.

Mutual Funds are a pool of funds collected from many investors in order to purchase stocks, bonds, and other investments in greater amounts. Mutual funds are shares of ownership in a group of companies.

Novartis, a large multinational pharmaceutical company, recently diversified by buying Alcon, in a £24.8bn deal. Alcon is a producer of eye care products such as contact lenses. Google has diversified by investing £124m in a wind power business. To what extent is diversification the best strategy to achieve profitable growth? Justify your answer with reference to Novartis, Google and/ or other organisations that you know. (40 marks)

There are many different ways to save money and there are different things to save for. A savings plan for an immediate want is apparently different than a savings strategy for retirement. One may choose to select stocks, bonds, or mutual funds for a savings strategy, however, my personal choice is to invest in bonds first, then mutual funds.

Investment ambitions can be as uncomplicated as a few certificates of deposits, or as diverse as an abundant array of interests that make up a large portfolio. You can start as simple as an FDIC insured savings bond, evolving into mutual funds, ultimately building a massive stock portfolio.

Somethings that I have learned are that you should never buy stocks that are rising rapidly because they are more likely to collapse and go in a decline. Another thing I learned is to sell stocks that are bringing you down. This will lose you a bit of money but if you continue to hold the stocks and it doesn't show and signs of revamping itself then you should sell it. Something I could do differently is to diversify my portfolio a bit more because most of my stocks are in technology companies and if they were all to do bad I would have no stocks doing good losing me a lot of money. I would also buy less shares in companies that are doing very well because they have a higher chance of heading down in a decline therefore having a lot of stocks in a company that's in a decline would be very bad.

The corporate strategy of the business diversification is to create a synergy to achieve more performance under a single umbrella rather than diverse business units (SNU, 2016). A business diversification is to build the company shareholder value when the independent business units can perform under a single corporation as an umbrella organization instead of independent parents or a corporation. A diversified organization has many business units and each business units have its own business level strategy irrespective of whether they are related or not. A successful business diversification not only spreads the business risk across the diverse units but also adds a long term economic value to the company. The strategy for starting a new business is based on industry attractiveness test, the cost of entry and the better off test (Thompson, Peteraf, Gamble, and Strickland, 2016).

The six stocks that I used to create my portfolio included Altera Corporation, Cabot Oil & Gas Corp., Dominion Resources, FMC Corporation, Chevron Corporation, and Nike Inc. Each of my stocks had weights, which I distributed for my $100,000. 20% of the $100,000 went towards Altera Corp., 15% to Cabot Oil $ Gas Corp., Dominion Resources, and Nike Inc. Finally I allocated 10% towards FMC Corp. and 25% towards Chevron Corporation. The stocks that I chose were intended to make my portfolio as diversified as possible so that I could receive high returns. I found that Dominion (D) Resources was the most steady and reliable

The three benefits that I see with a diverse organization are correlation, acceptance and patience. The combination of these three items will lead to future success of any organization. These concepts are applicable to the employees, employers and customers.

Make your choice of investment. I am going to going on a growth asset investment as I have a life ahead of me so that means I have a long time to recover and get the money back that I have lost.

Which means that you may not need to access the fund from investment anytime before maturity. Based on your primary objective, you may need some investment products that have the feature of low liquidity and more focus on stocks, for example.

The stock market can be a scary place, especially for those who have little knowledge of how stocks work or how to invest their money. Even before the crash of the market, many were reluctant to invest their life savings in a stock that fluctuates in value, with fear of losing everything they’ve worked for. Although analyst look to pin point trends and predict the future valuation of stocks, no one person can predict the day to day performance of a stock or investment fund. One tactic that financial planners and investment advisors use to try to combat the risk of the market is an investment method called diversification. Simply put, diversification is the use of multiple types of investments in your portfolio, exposing you to the

Just like anything one performs, investment comes with risk, and it is for one to determine the amount of risk to take. If one seeks for more risk, it is logical to seek for more return. Furthermore, there is risk in investing in a single stock because of the systematic risk, the unavoidable risk in the market. To diminish this from occurring, a well-diversified portfolio can reduce the risk of gambling all resources in a single stock. To add up, I am willing to diversify my investment into Apple, Mohawk, and Tesla Security, with a determined Security Market Line.

In today’s global markets companies are faced with tough decisions, one of the toughest decisions a corporation faces is whether or not they should diversify their business. Diversification simply means to mix a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio (Silvia M.Chan-Olmsted, 2007). Firms that have success strive to transfer their winning business know- how to new activities. To these firms,