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Building up · 4 min read

Why one great company is riskier than ten decent ones

Every company carries two kinds of risk: the risk of being a business at all, and the risk of being that specific business.

The second one can be reduced almost for free by owning several unrelated companies. If one hits a scandal or a recall, the rest carry on.

This is why most beginners are steered toward broad funds first, and single stocks second — as a way to learn, not as a way to get rich quickly.

Remember

Spreading money out removes the risk you're not paid to take.

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