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Originally Posted by BYU71
Reread what I wrote, not what you want me to have meant. I mentioned someone else condemned the theory, I indicated others could use it if they choose.
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No you took a swipe. You said a person you respect a great deal called it mental masturbation and you found it convincing ... That's a bit of swipe.
Quote:
Originally Posted by BYU71
I was suggesting, maybe not clearly enough diversification. Diversification could mean a portfolio of large cap value, large cap growth, small cap value, small cap growth and an international blend.
You wouldn't have to have bonds, real estate, commodities, etc. to be diversified as you probably would have to have those in order to be following the portfolio theory.
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I am fine with your first paragraph ... It may be entirely consistent with portfolio theory depending on the preferences of the investor. I think you may be arguing against a version of portfolio theory that is oversimplified and taking a stylized version too literally.
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Originally Posted by BYU71
As for "genius investors". Those folks give us long term capital, over the counter bubbles and sub-prime. The first genius I encountered was Michael Milliken (sp) who gave us Junk bonds.
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LTCM was clearly not following portfolio theory ... it may be an interesting example but it can hardly be used to condemn portfolio theory.