Today’s Investing Lesson: Diversify

The S&P 500 had a big up day yesterday, and a big down day today. It’s almost back where it started, yet our Buy List managed to beat the index on both days.
What’s particularly impressive is that we were able to stay ahead of the market today even though shares of Varian Medical Systems (VAR) got a super atomic wedgie. The stock dropped 8.6% today. The 11.4% jump in Respironics (RESP) helped ease the pain.
Too many investors never give a thought about diversifying across industries. Or they think diversity means owning several tech stocks. You can own only a few stocks and track the market very closely. Also, you can own hundreds of stocks and have a very low correlation to the rest of the market.

Posted by on January 25th, 2007 at 4:50 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.