Post-Madoff, Beware Benign Dangers

Every once in a while there is a sensationalistic story like the Madoff scandal to remind us, as if we needed it, not to put all our eggs in one basket.

Losing every nickel is the most dramatic outcome, though there are many more benign dangers. The likely consequence in these instances is subpar performance over a lengthy period, with the occasional blowup that can be foreseen.

I have been reading in articles, blogs and blog comments about a portfolio concept that seems to be universally adored but has pitfalls. Not knowing about the pitfalls can be worse than the pitfalls themselves. ...