The Danger of Diversifying Without Really Diversifying
Like many investors, I'm a huge fan of exchange-traded funds (ETFs), particularly because they combine the best features of stocks and mutual funds. When I invest in a particular company, I own only its stock. When I invest in an ETF, I own a diversified portfolio of stocks from many companies. Buying an ETF is like buying a whole basket of high-performing investments, thereby diversifying my portfolio.
However, there's an inherent danger in believing that you're diversifying your portfolio simply by putting your money in ETFs.
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Source Fool.com
