Individual Stocks or Portfolio of Stocks

Certainly one can understand that an individual stock might greatly outperform a basket (portfolio) of stocks. However, keep in mind that diversification can help protect capital. When polling investors their number one goal is capital preservation, followed closely by capital gains. Most believe that having capital gains automatically protect their capital.

That sounds a lot like gamblers that boast on their winnings but, never mention their losses.

Every investor has had or will have a loss. In your trading plan you may consider cutting losses in the single digits ie: 1% to 9%. Let winners run and include a ratchet stop, price alert, or percentage gained.

Yes, an individual stock might greatly outperform a portfolio of stocks. (That’s the good news)

Likewise, an individual stock might greatly under-perform a portfolio of stocks. (That’s the news that hurts)