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Technology Stocks : Lucent Technologies (LU)
LU 2.560-0.4%Nov 18 3:59 PM EST
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To: Chuzzlewit who wrote (8935)7/30/1999 11:52:00 AM
From: Devil's Advocate  Read Replies (1) of 21876
 
I would add two things to what you said.

First, you don't need to have 100 stocks to be diversified. The risk associated with non-diversification, called non-systematic risk, cannot be reduced further when your portfolio has already 20 stocks. It is assumed that each stock has about the same weight, of course.

Secondly, your portfolio is not diversified from my perspective since most of your stocks are in the high-tech sector. You have enjoyed tremendous returns because you have increased the risk substantially by targeting one sector.

It would be wise in my opinion, to find growth stocks that offer equivalent growth perspectives in other sectors. You would then reduce risk while targeting about the same return.
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