portfolio diversification, simple phenomenon

Investment is an art. If one wants to grow financially s/he has to invest in such a way that his/her wealth should increase. One way to invest money in secured way is to make portfolio. This theory is based on a proverb that never put your all eggs in one basket. If you put then simply there is risk of loosing each one of them.
Portfolio, in another term is diversification is investing the money in different assest that will increase net wealth with low risk. Diversification are of many type i.e. Superfluous diversification, markowitz diversification etc.
Superfluous diversification means diversify your investment in 20-30 assests. This diversification is only for the shake of diversification. It makes the things complicated, increase the cost of portfoli management. Another diversification is markowitz diversification. This diversification suggest to invest money accrding to risk and return associated to the assests. Further there is some kind of correlation among the assests and markowitz diversification strongly suggests that this correlation should also be considers while investing your hard earned money.
One simple example

nAssume that the investor invests 50% of capital stock in stock A and 50% in B
•1. Calculate E(R)
•E(Rp) = sum of xi E(Ri)
•E(Rp) =.5(.05) + .5(.15)
•E(Rp) = .025 + .075
•E(Rp) = .10 or 10%

here if one invests money in only one assest then the risk is very high. Portfolio risk is simple weighted average value of standard deviation.

New terrorist attack in Mumbai

I was almost drunk on that day in a German city Dortmund with one of my friend here. After 21:30 we went home and turned on the TV. To my surprise Mumbai was on fire. CNN was telecasting the live news report of explosion and attack in two renowned hotel of India; Hotel Taj and Hotel Oberoy. More than 100 people were killed and more than 300 were injured. I could not stop myself changing news channel but every channel had same news. i was watching TV till 2:oo oclock and the next day each news paper, news site had only one news; Mumbai on fire, terrorist attack in Mumbai etc.
Suddenly i remembered some of my indian friends and worried about them. Thank god all them and their family are safe. But i have deep sorrow to the people and the family who are killed and injured in this hinious attack.
India a growing economy and a rising power of the world was shoked from this attack. India has accused pakistan as attacker and supporter of that attack which pakistan has already rejeted and condemned the attack. Many countries have condemned the attack but major question is to fasten the rescue operation which i saw lacking in Mumbai. Still people are trapped in two hotels and some other places. Terrorist have made some hostages and mumbai pilice and army has been trying to take the situation n control.
After 1993 mumbai attack this is the biggest one attack in Mumbai, the economic capital and film capital of India.