In the market, many investors will struggle with a question: Is it better to concentrate on buying one stock or diversify their funds into multiple stocks? Below we have prepared relevant contents for your reference.
Decentralized positions and centralized positions have their own advantages and disadvantages. When investors choose, they need to analyze according to their advantages and disadvantages, market conditions and personal investment preferences:
The advantages of centralized positions are: if investors choose the right stocks, they can get high returns and make funds grow rapidly; Disadvantages: The ability of investors to select stocks is very high. Investors need to know the investment targets they buy very well. Once they buy the wrong ones, they will pay a relatively high price. At the same time, if systemic risks occur or the fundamentals deteriorate, they may cause permanent losses of funds.
Advantages of diversified investment: Diversified investment in multiple stocks will not affect the overall investment income if any stock is wrongly selected. The more diversified the positions, the more diversified the risks of individual stocks; Disadvantages: the number of positions is large, too much will increase the burden on investors, which is hard to see. At the same time, the rate of return is relatively low if you diversify your investment.
generally speaking, when the market is good, for example, in a bull market, it is better for investors to concentrate on holding shares, and by buying a certain stock, it will bring greater benefits to investors, while when the market is poor, for example, in a bear market, it is better for investors to diversify their investments, so as to spread the risks and ensure the safety of the principal. At the same time, in time sharing, it is better for investors to diversify their investments. Reasonable allocation of positions between funds, for stocks that are in the hot spot of the market, their positions are heavier, but they cannot exceed 5% of the positions.