I’d like to continue our theme investing dangerously.
The danger of geopolitics: There are always concerning geopolitical headlines that may impact the value of your investments. War, terrorism, natural disasters, and the way a country’s leadership reacts to these realities, can cause market fluctuations. The best way to mitigate political risks around the world is by always adhering to the principle of diversification. All companies, sectors, and countries go through cycles. When things go south, having an overly concentrated position in any one area of the market can be devastating. The best way to protect your portfolio from this risk of over-concentration in one market segment is to have a policy of diversifying across many asset classes and countries around the world.