In 1948, the Secretary of Commerce, Charles Sawyer, called Detroit’s automobile industry, “A symbol of the way in which the American economy could best provide the average American with a steadily increasing abundance of the things he wants and needs.” As a result, Detroit enjoyed a thriving economy, but unfortunately in 2013, Detroit filed for bankruptcy.
So what lessons can be learned from Detroit? I believe it would be wise to heed this recommendation from Morgan Housel of The Motley Fool, a leading investment publication: “Things change unexpectedly, and often for the worse. Diversification is the best way to mitigate that risk.”
According to The Motley Fool, the fall of Detroit can teach investors three important lessons.
I recommend that you avoid concentrating your investments, no matter how safe or promising they appear. Instead, use global diversification as you seek reasonable returns while mitigating risk.
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