Shakespeare: Risk Manager

Why diversify?

Mark Twain once famously claimed that the best way to invest is to put all your eggs in one basket — and watch that basket! And there’s a lot of insight there. Concentrating your energy and your attention is a good way to grow a business or develop yourself professionally. It’s a reasonable approach to managing risks you can control.

But diversification is the way to manage risks that you can’t control. The economy, weather, government shutdowns—there’s not much you or I can do about these. So dividing assets among different ventures reduces your dependence on any single investment.

Shakespeare understood this four centuries ago. Early in The Merchant of Venice one of his main characters says , “My ventures are not in one bottom trusted; / Nor to one place; nor is my whole estate / Upon the fortune of this present year.” Splitting up his interests makes him more secure.

Diversification is the compliment that wisdom pays to prudence—because we don’t know the future. Specialization may build wealth, but diversification preserves it.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-09-27T09:21:45+00:00 September 27th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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