Spiffy Entertainment

Portfolio Diversification

This is something I want to clarify briefly as I got the wrong idea about it early on as to what was meant by “diversify your portfolio.” When I began, I thought that meant buying a basket full of different stocks… wrong, wrong, wrong. Diversifying your portfolio means buying stocks in different sectors. You don’t have to buy into EVERY sector, but dipping your feet in a few is the best way to diversify. Here’s a short example list of some of those sectors with examples of companies within them. Some stocks cross over into more than one sector as well and many sectors have lots of industries within them, so the possibilities go on and on,

Technology - “FAANG” (Facebook, Apple, Amazon, Netflix, Google), NVIDIA, Qualcomm

Financials - Bank Stocks, Visa, MasterCard, Insurance Providers

Health - Pfizer, AbbVie, Johnson & Johnson, CVS Health, Moderna

Communications - Verizon, AT&T, T-Mobile

Consumer Staples - Coca Cola, Pepsi, P&G, 3M, Kraft/Heinz, Kimberly Clark

Energy - Exxon, Chevron, Kinder Morgan, PPL

Real Estate - Realty Income, STAG Industrial, Digital Realty, Starwood Property Trust

So you choose whatever you like in a few different sectors to diversify your portfolio. The reason for doing this is so that if one industry happens to tank, it won’t kill your entire portfolio… you’ll be in better position to weather the storms while your other stock sectors are doing better. The market can tend to cycle between different ones performing better than others at different times.