What are you risking?

Someone sent me a newsletter that essentially is an advertisement to buy some diversified funds. Attached in the newsletter is this picture which I found it very interesting. This is, of course, not the first time nor the last time I’ll ever see this picture. I’ll like to take some time to think about the myths portrayed in the diagram.The diagram shows the investment risk pyramid, where the highest and presumably highest returns are placed right...

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Diversification

On the subject of diversification, there had been many many articles and books written about it. I'm here to contribute more noise to it and provide another dimension on that subject. Diversification works very well when the market is in order. We all know that the market is fairly efficient, but not entirely so all the time. To assume that each and every individual is fairly rational when they evaluate their own buy and sell transactions is,...

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Newbie mistake in dividends

Let's say you have reit A with 10% dividend yield at $0.40, then another reit B with 10% dividend yield at $1.00, which would you buy?Reit A, because it's cheaper so with the same capital I can own more so I'll get more dividend? That's what I thought till I calculated it out. Here it goes:Supposedly I have $4000 to invest. For reit A, I can buy a total of 10 lots (4000/0.4 = 10,000). Thus, at the end of the year, I'll have a total of $400 in dividends. (0.40 x 0.1 x 10,000)For reit B, I can buy a total of 4 lots (4000/1 = 4,000). For this reit,...

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