How Do You Limit Risk In The Stock Market For Beginners?
If you are going to invest in the stock market, the best way to prevent your portfolio from flopping is diversification. In investing, the phrase, “putting all of your eggs in one basket” refers to a simple portfolio of only one or two different stocks. This type of investing, no matter how strong a stock may look, is the fastest way to go bankrupt. Look no further than those who relied on the seemingly robust Enron, WorldCom, or Tyco stocks (though these are the extremes, they are meant to illustrate the unpredictability of even the seemingly safest stocks). So how can you limit your risk and maintain a healthy presence in the market? Don’t fool yourself into thinking you’re the one who can make the big kill. Sure, you can put a huge investment into Nameless Software Company and be lucky enough for them to come out with the next big thing in computer technology. But if that company comes out with a new technology that mirrors the reception that Windows Vista received, you’re not going
