Ep. 794: The World Doesn't Care About You with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
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How to Diversify Risk in Your Investment Portfolio
One of my favorite all time guests is someone who I always reach back to a couple times a year for new and not so new listeners to be reminded of an interesting and novel way of thinking. Why do people fail to diversify risk in their investment portfolios? We study how lay investors, people with low financial literacy, invest in financial assets whose past or expected returns are provided. Assets with positively correlated returns feel more fluent, more familiar, simple, predictable, and thus are erroneously perceived as less risky.
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