You put all your money in one stock...
and it crashes?
Better to spread your money among several stocks.
Never too much of anything.
In a market crash...
all stocks might fall together.
So... also spread your money among different "classes".
For example: stocks, bonds, etc.
"Diversification is the only free lunch in finance."
Harry Markowitz, Nobel Laureate in Economics
When we mix an asset class that tends to Zig...
With one that tents to Zag...
The combination fluctuates a lot less.
It is better when the assets in my investment portfolio tend to move differently.
Yes, exactly.
Although, sometimes everything moves together.
You are better off with a balanced portfolio.
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