Diversification And Your Portfolio by Phil Abel
Thinking about adding financial and commodity futures to your trading? Here’s how it can improve profitability and reduce risk.
Stockpicking can enhance a portfolio, but only to a certain extent. If you incorporate additional markets such as financial and commodity futures, it can substantially enhance performance and reduce risk. The trader or investor who has chiefly invested in stocks and has not yet considered the possibility of diversification into other markets may find adding financial and commodity futures to his or her portfolio a highly lucrative venture.
The past decade has witnessed stock prices rising to unbelievable highs and then sinking to multiyear lows. All too many investment and trading accounts have taken hits. By employing a more diverse array of assets and some basic trading tactics, a trader could potentially be at or near all-time equity highs today, instead of suffering extended drawdowns.