What if...
You put all your money in one stock...
and it crashes?
Better to spread your money among several stocks.
Never too much of anything
Great, but...
In a market crash...
all stocks might fall together.
So... also spread your money among different "classes".
For example: stocks, bonds, etc.
I Can Explain
It is not that complicated.
When we mix an asset class that tends to Zig...
With one that tents to Zag...
The combination fluctuates a lot less.
Diversification is the only free lunch in finance.
Nobel Laureate in Economics and father of Modern Portfolio Theory
I See...
It is better when the assets and asset classes in my investment portfolio tend to move differently.
Yes, exactly.
Although, sometimes everything moves together...
You are better off with a balanced portfolio.
