One-Third of My Portfolio Is in These 3 Stocks
When it comes to diversification, I find myself agreeing with the late Charlie Munger. "The whole secret of investment is to find places where it is safe and wise not to diversify," Munger once said.
For an investor focused on speculative growth stocks, diversification is the name of the game. When the risk associated with any individual stock in your portfolio is high, spreading out your investments is essential. Ideally, the few big winners will more than offset the many losers.
An alternative strategy is to avoid highly risky stocks altogether. Instead, identify opportunities where the risk is low and few things need to go right for the stock to do well. That's Munger's investment strategy in a nutshell, and it's mine as well.
Source Fool.com
