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You are standing in the line at Starbucks in the PMU. You accidently overhear a conversation...

You are standing in the line at Starbucks in the PMU. You accidently overhear a conversation between two students in front of you. One student says " My father told me that he got a phone call yesterday and the caller was offering him an opportunity to invest $100,000 in a diversified stock portfolio. The investment was described as being guaranteed to pay an annual rate of return of 20% for the next 10 years." The other student replied " Wow, that is a great opportunity! I wish I got phone calls like that! I could get rich!" In less that 60 words, summarize your thoughts about this opportunity.

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Opportunity of $100,000 investment in a diversified stock portfolio for about next 10 years could possibly get a 20% but on a contrary no one can guarantee the return as a portfolio manager. One could get a good annual rate of return on the stock invested for a longer term like 10 years, but only when the market performs stable and show good growth rate in it's performance and depends on how diversified the portfolio is and the range of risk and return over the stocks. All the stocks included in the portfolio should be stable by it's company performance with strong fundamentals.

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