Perceived Risk vs. Real Risk: A Key to Successful Value Investing

Value investing is about purchasing investment assets at prices that put the odds of above average returns heavily in your favor. Excepting an investment that is going to go bust, almost any investment can be profitable if purchased at a low enough price.

The key to successful value investing is buying assets when the perceived risk is greater than the real risk. It’s equally important to avoid assets when the perceived risk is less that the real risk.

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Disadvantages of Diversification in Investing

You can avoid the disadvantages of diversification in investing by managing your own portfolio. Diversification is one of the most important concepts in investment portfolio management, but proper diversification is the key. While building your portfolio keep in mind the disadvantages of diversification in investing to help you achieve optimal diversification.

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