My Attempt To Diversify, Early 2007

Back in the day, 2007 to be specific, I thought I had learned all there was to know about diversification. I opened an account at Sharebuilder.com and began periodically investing in a well diversified (small cap, real estate, international, commodities, whole market) account. I thought I had built a decent diversified portfolio.

The table below shows the securities I purchased and the weights I applied to each security.  It shows what would have happened IF the portfolio had reached $10K on 5/22/2007.  By 6/30/2013, the portfolio would have been worth $8,834. It would have lost 12%. In contrast, the Dow, over the same period, gained 11%.  Fortunately, I liquidated the entire account long before I had invested $10K; but I did lose money in it.

TCS ShareBuilder Acct, 2007

Bottom line on my efforts… DIA returned 11% vs -12% for my Sharebuilder account over the same time period.

Return to “Why Not A Diversified Portfolio

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