John Roberts, the Supreme Court nominee, is like many Americans in at least one respect: His investments aren't diversified enough to reduce risk and boost returns.
Roberts, in response to a Senate Judiciary Committee request, disclosed his finances in early August. His investments as of Aug. 1 included $1.6 million in stocks, $1.7 million in mutual funds and $1.4 million in cash.
Using the "X-Ray" portfolio-screening tool from investment-research firm Morningstar Inc.'s Principia database, MarketWatch analyzed Roberts' stocks and funds, and a combination of the top 50 holdings.
Several financial advisers were then asked about the results. They didn't know at first who they were judging, only that the subject was a 50-year-old father of two, with a house in an upper-class suburb and a professional career.
Their unanimous verdict: Roberts is overly concentrated in specific stocks, owns too many mutual funds and hasn't spread his wealth across different investment categories.
Plus, he has a lot of idle cash, no bonds and little international exposure.
"It's a very unbalanced portfolio," said Kevin Ellman of Wealth Preservation Solutions in Ridgewood, N.J. "It's a typical thing where people put together a high number of investments and they confuse that with diversification."
[...]
"The allocation doesn't make a lot of sense," said Roy Diliberto of RTD Financial Advisors in Philadelphia. "I certainly wouldn't have all that money concentrated in five stocks, all of which are very similar in nature and are going to plummet or rise at the same time."
The crucial importance of diversification — the most basic lesson in investing due to the hazards of overconcentration — also applies to the Supreme Court itself. All Justices who are "very similar in nature" will certainly "plummet or rise at the same time."
The Supreme Court is the American portfolio of justice. If we load it up with several ethnicities and genders but just one ideology, we are confusing superficial variety with true diversification of opinion.
This is the very essence of why neither party should pack the courts.
