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Tue, March 4, 2025

What 125 years of data says about diversification and investing at record highs


Published on 2025-03-04 16:21:16 - MarketWatch
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  • Making its way around social media was the clip from "Ferris Bueller's Day Off" in which the economist Ben Stein explained the Smoot-Hawley Act, when Republicans raised tariffs in a bid to increase revenue and ended up exacerbating the Great Depression. Wonder if there's any current relevance.

The article from MarketWatch discusses the implications of investing in the stock market at record highs, using 125 years of data to explore the effectiveness of diversification. It highlights that while investing at market peaks can be daunting due to potential immediate losses, historical data suggests that over long periods, the impact of buying at highs is less significant than one might expect. The piece points out that stocks often recover from downturns, and long-term investors generally benefit from staying invested rather than trying to time the market. Diversification across different asset classes, sectors, and geographies is emphasized as a strategy to mitigate risk, especially when markets are at or near all-time highs. The article also references studies showing that even after significant market peaks, diversified portfolios tend to perform well over time, suggesting that a well-diversified approach can help investors weather market volatility and potentially achieve better risk-adjusted returns.

Read the Full MarketWatch Article at:
[ https://www.marketwatch.com/story/what-125-years-of-data-says-about-diversification-and-investing-at-record-highs-9a691330 ]
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