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Diversification is key to managing risk from "summary" of The Psychology of Money by Melody Jefferson,Morgan Housel
One of the most fundamental principles in managing risk is diversification. This concept is simple yet powerful - by spreading your investments across different asset classes, industries, and geographic regions, you can reduce the impact of any single investment underperforming. Diversification helps to protect your portfolio from the inherent uncertainties and fluctuations of the market. When you put all your eggs in one basket, you are essentially putting yourself at the mercy of that specific investment. If that investment fails or experiences a downturn, your entire portfolio could suffer significant losses. This is why diversification is crucial - it helps to mitigate the risks associated with individual investments by ...
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