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Diversification reduces risk from "summary" of A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Twelfth Edition) by Burton G. Malkiel
Diversification is a fundamental principle that all investors should heed. By spreading investments across different asset classes, geographical regions, and industries, individuals can minimize the impact of any single investment's poor performance on their overall portfolio. This strategy is akin to the age-old adage of not putting all your eggs in one basket. The beauty of diversification lies in its ability to reduce risk without sacrificing returns. While it may not eliminate risk altogether, it certainly mitigates the impact of unforeseen events or market fluctuations. By holding a diversified portfolio, investors can weather the storm when certain sectors or industries experience downturns. Furthermore, diversification helps investors capitaliz...
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