Question

Consider this statement: "Most people can't afford to invest in a diversified portfolio. Therefore, the idea that we should only analyze securities in a "portfolio" context is not right." What do you think?

Answer 1

Most people cannot afford to invest in a diversified portfolio because they are not having adequate money to allocate to different asset classes and they are having exposure to one or two asset classes mostly because they do not have much money to diversify into different assets as they are under privileged.

so, we should not only be analysing the securities in a Portfolio context in regards to diversification because there are some people who do not make a Portfolio and they do not diversify their holding because they do not have enough money to allocate in two different asset classes and hence they should be analysed based upon the the performance of that asset regarding to the whole benchmark so they should be trying to invest particularly into that single asset and they should be trying to compare it in regards to the overall benchmark.

Most people do not have exposure to equity markets in underprivileged country or they also do not have access to to Bond markets because they are highly primitive in nature and they want to a still stick to old ways of investment and hence they do not prefer the portfolio allocation so portfolio management should not always be the basis for judgementjudgement of an individual performance in regard to his investments.