Part 8/9:
It's also critical to note that diversification isn't merely about the number of stocks owned. An effective portfolio must span various sectors to truly mitigate risk. Owning 100 stocks within the same industry may still expose an investor to significant risk if that sector tanks. A best practice suggested by financial experts is to avoid allocating more than 5% of total assets to any single stock, especially for those who may have concentrated risk through their employment or regional economy.