Diversified Portfolios

Asset allocation is a basic tool for thesuccessful physician-investor. Those whocame out of the recent bear market maulingwith the fewest scars are those whohad put a chunk of their money intobonds and cash, instead of overloadingtheir portfolio with stocks. Diversification means putting money into differenttypes of investments within an assetclass. Again, those who had their equitystake in a full spectrum of stocks orfunds, including large, mid, and smallcaps, made it through the market collapsein much better shape than those whomade big bets on the tech sector. Forexample, an investor who began the year2000 with $10,000 in the average diversifiedUS stock fund is now less than $750away from breakeven; some all-techinvestors may never make it that far.