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What is Stock Portfolio

Stock Portfolio is a collection of holdings on the stock market, owned by the same individual or organization. Although stocks may seem to be a risky investment, wisely built and diversified stock portfolio, over time, does better than other investments. Before creating an appropriate stock portfolio, one needs to research on different kinds of stocks, as well as on companies and individuals that hold them.

Stock Porftolio

While developing an investment strategy it is important to define one’s financial goals: one may have short term income orientation with high risk-income ratio or prefer a stock portfolio that is more stable and grows over time. It is important to remember that the sudden rise in price may be followed by an equally sudden fall. Therefore, one’s risk tolerance should be taken into consideration, as it is an essential component of trading. No matter what are the trader’s goals, it is advised to invest in more than 1 or 2 stocks. In order to have a profitable stock portfolio one should compile it with a mixed range of stocks to lower the investment risks. That is to say one should diversify investments.

A diversified portfolio spreads the risks over several companies or even industries and stock classes and if some assets lose money, others will earn enough to make up for the difference. If investors compile a balanced – diversified portfolio, they can remain secured even in the most unfavorable market.

Read an article about Constructing and Analyzing Stock Portfolios with GeWorko Method