Pro lessonPortfolio Diversification · 1/42 min read
Why diversify, and what concentration risk is
What diversification means, how concentration risk can wreck a portfolio, and why spreading risk lowers the damage from any single failure.
A portfolio is everything you hold, taken together. Diversification means spreading your money across different holdings so that one bad outcome cannot ruin the whole portfolio. The old saying is "don't put all your eggs in one basket."
Concentration risk is the danger of having too much of your money in one place: one coin, one sector, one platform or one idea. If that one thing fails, there is nothing to cushion the fall.
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