20
Lecture 3: Basic Investing—Keep It Simple
% Modern portfolio theory recognizes that there are two basic types
RIULVN7KH¿UVWW\SHLVWKHV\VWHPDWLFULVNWKDW\RXFDQ¶WJHWULG
RI7KHVHFRQGW\SHLVWKHNLQGRIULVNWKDWFRPHVIURPLQYHVWLQJ
LQDVLQJOHVWRFNLQVWHDGRILQYHVWLQJLQDEXQFKRIGLIIHUHQWVWRFNV
7KDW¶VFDOOHGXQV\VWHPDWLFULVN
% ,QGLYLGXDOVWRFNVFDUU\DORWRIXQV\VWHPDWLFULVNEHFDXVHDQ\WKLQJ
FDQKDSSHQWRWKHLUEXVLQHVVWKDWGRHVQ¶WDIIHFWWKHHFRQRP\DVD
ZKROH7KHW\SHRIXQV\VWHPDWLFULVNWKDWDIIHFWVHDFKFRPSDQ\LV
DOVRNQRZQDV¿UPVSHFL¿FULVN$QGDVDQLQYHVWRU\RXVKRXOGQ¶W
UHDOO\FDUHKRZPXFK¿UPVSHFL¿FULVNDFRPSDQ\KDVXQOHVVRI
FRXUVH\RXZRUNIRUWKDWFRPSDQ\ 7KDW¶VEHFDXVHLI\RXLQYHVWLQ
GR]HQVRUKXQGUHGVRIGLIIHUHQWFRPSDQLHVWKLV¿UPVSHFL¿FULVN
JRHVDZD\
6WRFNVDUHULVN\¿QDQFLDODVVHWVEXWWKH\DOVRKDYHWKHSRWHQWLDOWRPDNH\RXD
lot of money.
YDHHQPDL6WRFN7KLQNVWRFN