In one of the problems I was solving, they mentioned that resampling’s drawbacks are: riskier assets are over diversified.
Are we implying we have more than we have too much diversification?
and when we say that riskier assets are over diversified, is my understanding correct that we are allocating our money towards risky assets?
I believe the point is with resampling you are getting less return with each unit of risk so you have a sub-optimal portfolio
im still struggling to get over this concept
@Onda agree, the curriculum doesn’t elaborate on why this overdiversification is happening at all, it just throws it out there, like so many other things.
Does anyone know the theory behind this claim?