We use sector diversity to cut risk

Article Excerpt

One of our keys to successfully investing a client’s portfolio is to make sure their holdings are spread out across most if not all of the five main economic sectors—Resources & Commodities, Manufacturing & Industry, Consumer, Finance and Utilities. That way, they avoid overloading themselves with stocks that are about to slump simply because of industry conditions or changes in investor fashion. By diversifying across the sectors, you also increase your chances of stumbling upon a market superstar—a stock that does two, three or more times better than the rest of the market. Over your years of investing, you’ll need a few superstars to offset the inevitable losses. losses…