When basketball teams face an opponent with a prolific scorer, they tend to say things like "we know we can't stop him, but we just hope to slow him down."
That's a good way to look at managing your investment risk. You can't eliminate it, but you can do things to reduce its impact.
Most financial professionals agree that diversificationGlossary: Spreading money across different investments so that no single company, sector or event can do outsized damage to the whole portfolio. is a good way to manage risk. Otherwise, everyone would just go all-in on their favorite investment idea.
Fortunately, investment activity is centered on Wall Street rather than Las Vegas, so that all-in mentality isn't very evident in money management. Recognizing that no one's judgement is perfect, and that unexpected circumstances can make a mess of the best ideas, people typically spread their money among several investments.
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