notices - See details
Notices
BS
Barry Schachter (not verified)
11th October 2015 | 3:18pm

The author is right that diversification in the human element of portfolio management can be good for portfolio performance, but not for all the reasons he cited. I think the author is really making a different argument, arguing for 'diversity' in the workplace. But the author begins with portfolio diversification and its impact on portfolio performance, and argues from that.
Diversification is good, in principle, because it can be shown mathematically to improve the performance of a portfolio (under pretty general conditions). However, the author here is claiming 'diversity' equals 'diversification' and therefore more diversity is good for portfolio performance. The author makes no serious attempt to establish a plausible link between increased diversity and improved performance. For example, relying solely on one quotation from a search firm, the author implies gender diversity = diversity of thought, which seems strange, IMO. The author argues more reasonably that diversity of thinking is a type of diversification and that should be pursued for its potential to improve performance. In that I agree with the author. There are of course many other, excellent, reasons to pursue diversity in the workplace.