subject: Joseph Wang Financial Explains Time Diversification [print this page] Everyone understands that it is prudent and wise to diversify the assets in various investments, such as a wide portfolio of securities or mutual funds. This is what is called "not putting all your eggs in one basket". Is to give up on finding the ideal investment in exchange for greater security and lower the risk of the entire estate.
The temporal diversification is much less known but just as useful or more that diversification of assets in different assets. Spacing is to go shopping over time. They can be regular intervals or can be flexible depending on market conditions and investor knowledge. The goal is not to invest all the assets just before a major crisis or stock market crash. In the same way that asset diversification is surrendered to find the ideal investment to diversify temporary waiver of finding the ideal time to invest.
Many people, especially those who are thinking about starting to invest in the stock market, spend a lot of time and energy to find on your own, or have an expert tell you, what is the best time to go from having invested 100 % of assets in fixed income to have 100% of assets in equities.
The prudent and sensible answer to this question is that there is no such prime. There really exists, and is the minimum of the last or the next big stock market drop. But the odds of matching with the minimum are almost nonexistent. If anyone knows how to do it not been made public his method.
There are 2 alternatives, the more risky is the ideal time to try to detect through fundamental analysis, technical, a combination of both, and so on.
The alternative is prudent to give up on finding the ideal time and use time diversification.
This does not happen to have 100% fixed income to have 100% equity in a short space of time, but start by investing in equities a small percentage (1%, 2%, 5% depending on the investor's assets, its future earnings forecast, etc..) and will take several years (2, 3, 5, etc.., also depending on the investor's personal situation and the market) to reach the maximum percentage that want to be invested in equities, which can be 30%, 50% or 100% of total assets.
by: Joseph Wang
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