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Keeping it Simple on the Road | Ep.6: Endeavoring to Diversify

Keeping it Simple with Simplify Asset Management

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The Importance of Sector Risk in Diversification

In the original paper, essentially, we were just randomly selecting stocks in the night most naive way you could imagine. A 250-name sector stratified portfolio has materially less dispersed outcomes than a 25-name sector Stratified portfolio. It does not mean you can have a concentrated portfolio if the goal is to reduce the magnitude of bad luck.

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