Diversification can reduce risk from "summary" of Buffettology by Mary Buffett,David Clark
Diversification can reduce risk in investment portfolios. This concept is one that Warren Buffett himself has emphasized time and time again. By spreading out investments across a variety of assets, industries, and companies, an investor can minimize the impact of any one investment underperforming. This way, if one stock or sector experiences a downturn, the overall portfolio will be less affected. When you have all your eggs in one basket, so to speak, you are at the mercy of the performance of that single investment. If it does well, great, but if it falters, you stand to lose a significant portion of your capital. However, by diversifying your holdings, you are essentially safeguarding yourself against the risk of catastrophic...
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