Diversification is inadequate as a risk management technique and too primitive for the new environment of volatility and uncertainty.
As the play, The Merchant of Venice, unfolds, all of Antonio’s ships sink, his business collapses and Shylock demands his pound of flesh.
Investing based essentially on the business cycle outlook is a fools’ game.
The cash in the portfolio may be enough to take advantage of the opportunity. Or it may not be enough. It doesn’t matter. The investor is in the delicious position of comparing the new opportunity with all other holdings in the portfolio.
Since analysts’ reports are so important in our work of identifying and studying companies to invest in, we need to look at the strengths and weaknesses of these reports.