Diversify or Zero In ?
  • Is it better to diversify your investments like all the popular financial magazines suggest or is it better to really zero in hard and learn all there is to know about one particular sector, in essence, becoming a "subject matter expert" ? Typical areas could be the oil service business, dry bulk shipping, real estate, etc. Even drilling down further, to possibly becoming a "SME" in the hospital or manufactured home reits for a smaller universe. Can knowing every company in a sector and everything about the business they are in be better than the shotgun approach?
  • @Bill_S I think if you want to have a higher chance of outperforming, it's much better to become an expert in several sectors or specific stocks. It's about gaining "the edge" as hedge fund guys call it.

    80% of gains for the year are generally due 10-20% of the portfolio based on my experience. I've zeroed in on 5-8 stocks Intrade in and out of throughout the year.
  • Agreed. In the early 80's I had a friend who worked in the oil service business, I don't know why, but that business really got my attention. I eventually knew just about every viable company in the field, how many rigs they owned, how many were leased out at a given moment, how much they were paid per day for the leased rigs, etc. I invested long and short. It was some of the best money I had ever made in investing, put two kids thru college on the profits. But like most investors, I thought I was a lot smarter than I really was and started investing in several areas at once with very mediocre results.

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