I have just recently got a basic understanding of the stock market. It is a very interesting subject and I always find myself checking out news concerning the market when I wake up. One thing I have learnt about investing is about diversifying. So if one stock you have invested in goes bad that does not mean you are ruined. This makes sense. If I am putting my money into a single business I must believe that this business is going to succeed and at least not going to fail.
I woke up this morning and checked the news as usual. I read something about apple developing their own chips for their phones, which they previously bought of a UK business called Imagination. I read that investors had began pulling out of the business. So i googled Imagination share prices and they had dropped… 65%! A short sellers dream! 65%! Imagination got most of its business from apple. It was heavily dependant on apple. Imagination had all its eggs in one basket.
This makes a great case for diversifying your portfolio. You do not want to be reliant on a single investment. This can be applied to many things. You do not want to be reliant on a single friend, significant other, family member, or income. If something is taken away you need to be sure you won’t be ruined by it.