RiXtrema: Diversification and Its Malcontents

Instability of the global financial system is causing reevaluation of some of the most revered financial theories.

In particular, the concept of diversification, a staple of financial risk education and a foundation of risk management under Modern Portfolio Theory, has to be reassessed in light of financial market realities. Article highlights the central flaw of the ‘fallacy of diversification’, and follows it to its ultimate effect on financial markets and the real economy via the risk

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