The free lunch that diversification provides seems a good strategy
“Diversification is the only free lunch.” This quote from Nobel prize laureate Harry Markowitz is one that most investors should take to heart. Markowitz won his Nobel prize for pioneering work on modern portfolio theory, and a large part of it was on the benefits of diversification. So he might be a little biased.
For those that are not in the market 24/7, the free lunch that diversification provides seems like a good strategy. When you buy a JSE-listed company for your investment portfolio, the underlying exposure to SA might be lower than you think. The company can be listed in SA, but the underlying exposure could be as high as 90% offshore. The concept is easy to understand, though many retail investors have not had enough time to consider all the details.
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