Part 5/8:
Investing in growing industries can also provide additional stability; even if individual company plans do not materialize, overall market growth can lift their fortunes.
4. Don’t Play Meteorologists
Christine addresses the common pitfall of trying to predict the future performance of specific stocks. Investors often over-rely on one company, skewing their portfolios towards significant risk.
Diversifying investments by holding at least ten different stocks helps mitigate this risk. Historical evidence suggests that diversification can shield investors from losing substantial amounts during market downturns, providing a buffer against volatility.