Diversification
Diversification is spreading your money across different companies and industries so one bad outcome cannot sink you.
Ten tech stocks is not diversified. They fall together, because the thing that hurts one — interest rates, chip supply, a bad quarter for advertising — usually hurts the rest. Diversification is about owning things that fail for different reasons.
It has a cost: you will always own something that is doing badly, and you will never match the person who put everything into the one stock that tripled. What you buy is the guarantee of still being in the game after being wrong.
In Stoxhatch
Portfolio scores your concentration from 0 to 100 and shows the split by sector, so you can see when one industry has quietly taken over.
Related
- Position — A position is what you currently own in one company: how many shares, and what you paid for them.
- Risk — Risk in investing is the chance of a permanent loss, not the fact that a price moves around.
- ETF — An ETF is a single tradable share that holds a basket of many companies, so buying one gives you a slice of all of them.
Try it with $10,000 of simulated cash, no signup needed — or browse the rest of the glossary.