The glossary

Diversification

Diversification is the act of spreading your capital across assets that are different in nature and in behavior to mitigate losses. The opposite of diversification is concentration.

Anecdote

A Nobel prize in Economy once said “Diversification is the only free lunch”( Harry Markowitz, Portfolio Selection, 1959). Because no asset tends to overperform consistently over the long term (they often alternate good years with less good ones and not all at the same time) it is thought that diversifying can help improve your return you can expect for the risk you are taking. Diversification is also one of the oldest investment strategies in the world. “One-third inland, one third in business and one third in cash” can be read in very ancient texts for example.