Diversification helps manage risk from "summary" of Security Analysis: Fifth Edition by Benjamin Graham,Sidney Cottle,David Le Fevre Dodd,Roger F. Murray,Frank E. Block,Martin L. Leibowitz
The principle of diversification is a key tenet of successful investing, as it helps to spread risk and reduce the impact of any single investment on a portfolio. By holding a variety of different securities, an investor can protect themselves against the potential downfall of any one company or industry. This is because the performance of individual investments is unlikely to move in perfect correlation with each other, meaning that losses in one area can be offset by gains in another. Diversification also allows investors to capitalize on different market trends and economic conditions, as certain sectors may perform better than others at any given time. By spread...
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