Diversification
Diversification is spreading investments across many companies, sectors, and asset types so that no single loss can sink the whole portfolio.
Diversification is the practice of not putting all your eggs in one basket — holding a mix of investments whose fortunes do not all rise and fall together. When holdings are spread across different companies, industries, and asset classes, a bad outcome in one is cushioned by the others, reducing the overall volatility of a portfolio without necessarily reducing its expected long-run return.
It is often called the only "free lunch" in investing because it lowers risk without a matching cost in expected return. Diversification cannot eliminate market-wide risk — in a broad crash, most things fall together — but it removes the outsized danger of any single company or sector failing.
stocks-llm can help you explore companies across many sectors and themes, but it does not build or advise on portfolios. This definition is educational only, not investment advice.
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