The Danger of Diversifying Without Really Diversifying
Key takeaways
- NVDA Like many investors, I m a huge fan of exchange-traded funds (ETFs), particularly because they combine the best features of stocks and mutual funds.
- However, there s an inherent danger in believing that you re diversifying your portfolio simply by putting your money in ETFs.
- In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
NVDA Like many investors, I m a huge fan of exchange-traded funds (ETFs), particularly because they combine the best features of stocks and mutual funds. When I invest in a particular company, I own only its stock. When I invest in an ETF, I own a diversified portfolio of stocks from many companies. Buying an ETF is like buying a whole basket of high-performing investments, thereby diversifying my portfolio.
However, there s an inherent danger in believing that you re diversifying your portfolio simply by putting your money in ETFs.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »