When I look back at my time as an independent advisor, there are some things I would have done differently, and other things I wouldn't change. In this post, I'll share both.
One of the most important duties of a small-business owner is to closely watch the bottom line, especially when you're growing and income is rising. Obviously, you must be careful about how you allocate resources.
One of my "worst" decisions occurred in the middle of 2010. I was contacted by a fairly new company who had developed a product to measure diversification. The reason I was excited is that I had been working on the same theory myself. Here's what I mean.
Take a portfolio with three holdings, which we'll call A, B and C. All three holdings rise and fall. Simply put, if they all rise and fall at exactly the same time, then you have not achieved diversification. However, if A rises while B falls (or remains level), and C reacts very differently than A and B, then you have achieved a strong level of diversification. And, as long as each holding provides good 3- to 5-year returns, then the portfolio should grow (with modest fluctuations).
