Reflections on the financial crisis: when diversification failedp

For professional investors and financial planners alike, the past year and a half has been one of the most challenging ever. Cumulative losses on stocks, bonds, real estate and other investment vehicles are estimated to be in the vicinity of $50tr globally, with roughly one third of that coming from the United States. Most portfolio managers were unable to avoid large losses, including some renowned value investors. Even sophisticated university endowments that contain large allocations to alternative investment vehicles reportedly suffered losses in the range of 25 per cent to 30 per cent.