CEOs See `No Clear Signs’ of Crisis as Woes Intensify
It was all in the media a couple of months ago, the devastating fallout of subprime mortgages as people defaulted and the banks went under. In a recent article by Bloomberg they say that CEO’s in the financial industries in New York City don’t see which way the effects of those fallouts will go.
Investors are starting to see housing prices fall because of the subprime mortgage fallout and it may trickle to other areas. The best way to make sure this doesn’t affect your portfolio too much is to hedge your portfolio with other types of non-traditional assets.
I’ve always told people that if they hedge their portfolio’s, then they should never have to worry too much about one particular stock, industry, or market. In fact, Harry Markowitz wrote the famous article “Portfolio Selection” in the 1952 Journal of Finance. He went on to say that if you have your portfolio diversified over 21 different asset classes, you will actually increase return while minimizing risk.
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