A question I’ve been asked very often since the onset of the Great Recession is, “why don’t we just put all of our money in the S&P 500 index and forget about it.” Given the anxiety created by 2008, this feels like a reasonable question. If you own a diversified portfolio with large, small and mid-cap along with international stocks, you may find that your performance over the last 8 years is significantly less than the S&P 500’s. It’s no wonder why investors have become frustrated with their own portfolio’s performance. But before you abandon diversification and put it all in the S&P 500 index, let’s review why this might not be such a good idea.
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