Seven Amazing Diversified Stocks — Market Mad House

Diversification is one of the most powerful investing strategies around. Unfortunately, many investors do not diversify in the right way.

To explain, most investors diversify by investing in mutual funds. Ironically, 85% of active mutual fund managers made less money than the S&P 500 for 10 years in a row, MSNBC claims. In detail, over eight out of 10 active mutual fund managers underperformed the S&P 500 every year from 2009 to 2019, S&P Dow Jones Indices estimates.

In fact, 64.49% of mutual funds underperformed the S&P 500 for nine years in a row. Astoundingly, 92% of mutual funds underperformed the S&P during the 15 years between 2004 and 2009.

Fund managers perform poorly because the managers are human beings. Prejudices, lack of knowledge, and arrogance, warp the thinking of fund managers.

The Power of Diversification

Despite the fund managers’ limitations diversification is still one of the best investing strategies around.

Simply, diversification is not putting all your eggs in one basket. Mutual funds and exchange-traded funds diversify by investing in packages of stocks. For instance, buying shares in all the major tech companies.