Diversify Your Holdings
One thing that I can’t stress enough to investors is the importance of keeping a diversified portfolio.
While you may want to maintain a portfolio that has an overall conservative, moderate or aggressive slant, it’s important that you include different types of stocks. You’ve probably heard the old saying, “Don’t put all your eggs in one basket.” This is perfect advice for investors.
When you’re looking at your portfolio, you don’t want to see all conservative stocks or only technology plays. It’s necessary to select holdings that have different degrees of aggressiveness and come from a variety of sectors. Remember, your portfolio isn’t just a group of individual stocks. You need to think of it as a family, and within the family all the members need to work together.
A diverse portfolio will help you do well in a variety of circumstances and balance out when certain areas are performing better than others. So when you’re making stock selections, try to think of the stocks you already own and pick new ones that will complement those you already have. Diversification is the key to well-rounded profits.