Or perhaps, two or three stocks of different degrees of risk.
The practice of diversification among dozens of issues is sheer folly for medium or even fairly large securities accounts.
No mixed list can do as well as the prime leaders.
Selection of too many issues is often a form of hedging against ignorance.
- Some people imagine falsely that it is safer.
- One can know a great deal about a very few issues, but it is impossible to have a thorough knowledge of all the ones which go into a diversified list.
- The chance of errors in judgment is thus increased by diversification, and certainly keeping posted on a broad list after it is purchased is much more difficult than keeping posted on a few very select shares.
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