A basic investing principle to help you invest better, focus on a diversified portfolio

Have you heard the Bob Dylan song, where he explains one of the basic principles of investing? The lyrics go as follows: ‘For the loser now, will be later to win.... and the first one now, will later be last’. While Dylan had no intention of expounding on the workings of the financial markets, the lyrics perfectly sum up the principle of ‘reversion to the mean’. Here’s what GPT4 says about this theory: ‘In finance, reversion to the mean refers to the assumption that the price of an asset will mo .. 

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