Question

1. A good percentage of the portfolio (roughly 20%) is invested in Tenet Healthcare
   With the purpose of diversifying the portfolio, are you in agreement with this decision of investing heavily in the company? Why and why not? If you disagree, what would you recommend?

Answer 1

yes . I disagree with this decision of investing major part of portfolio with Tenet healthcare.Reason is below ,

• in the question , it says that , a good percentage of portfolio ( roughly 20 percent ) is invested in Tenet Healthcare with the purpose of diversifying the portfolio.
• The sentence "diversifying the portfolio" is very important.so iam said that it is a bad decision
• Firstly says what is portfoilo.Portfolio is the grouping of financial assets such as stocks , bonds , commodities , currency , and cash equivalents as well as mutual , exchange traded and closed funds.It also include non publicly tradable securities like real estate , art and private investments.
• Then look in to portfolio diversification. it is like a seat belt , for your investment portfolio.Thus it is a risk management strategy of combaining a variety of assets to reduce the overall risk of an investment porfolio
• Here in the question , says that , major part investing in tenet health care by diversifying the portfolio.here portfolio diversification is good theme , but it is not to be with one company only
• That means you can diversify your portfolio not only with one and only company . Take different companies . Otherwise you will have to suffer huge loss. Ok?
• diversification also does not guarantee better return or fewer losses.
• So , make sure that , you are spreading money to areas that don't go up and downs at the same time.
• you can diversify your portfolio as following ways .they are ,
• 1. Use asset allocation funds . It means that , these are the funds with a predetermined mix of stocks and bonds.for example , 60/40 funds,,  which means 60 percent stock to 40 percent bonds.
• 2.invest in a mix of mutual funds or exchange traded funds.
• 3.You can take your own customized portfolio with individual stocks and bonds , which is depends on your goal , time frame and risk tolerance.
• 4.you have to invest in vary company size and type
• 5.you may have to invest abroad also

Conclusion

• I disagree for investing major part with tenet healthcare by diversification
• Diversification is very good theme , but will select more companies , not only one.
• Diversify your portfolio into different allocation funds as stocks , bonds , commodity , currency , or others , which are not go up and down at the same time
• Diversification helps only to reduce risk in your investment , it not guarantee you higher return or fewer losses.
• So please invest your portfolio by diversifying it into major parts between more companies or ways.ok