Concentration vs. Diversification

How many positions to hold, the trade-off between focusing on your best ideas and spreading risk, and how to find a balance that fits your goals.

Two ways to build a portfolio

Some investors hold a few carefully chosen positions. Others spread money across dozens of stocks or a few broad funds. Both approaches have famous supporters. Concentration can produce big gains when you are right, while diversification smooths the ride and protects you when you are wrong.

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