going in all on one stocks is a sure way to ruin?

C

chipmunk

Or is it?

We are told never put your eggs in one basket. Diversify. etc... It's become such a cliche. Do you ever question it?

but I knew a trader who invested in one stock at a time and made millions. (he's drawdowns wre enormous but I guess if you make $2millin and give back $1million you are happy)

If you wait for almost sure things and do not trade any old stock IS investing in one stock at a time a sure way to lose it all or make a fortune?
 
It just increases your risk massively, that's the main drawback. If you have skill at picking stocks, then diversifying into at least 5 or 6 reduces your risk immensely, without reducing return that much.

The key is to optimize returns versus risk, NOT to go for pure returns regardless of risk. If you put 20-30% into the next Dell Computer or Berkshire Hathaway, you are still going to become very rich. The extra risk of going 100% into it just isn't worth the chance of wiping out if something happens.
 
I usually stick to about 4 at a time. But when I snag a big winner (and mos tof the time I have feelnig which ones are going to be the winners) I often wonder if I shouldn't have gone all in...

But I guess it is painful when you are wrong (which will always happen)

Cutten: What's your time frame for investing?
 
I have been trading 1 or two stocks at a time for 5 years and decided to switch to the futures and swings on Q's or Diamonds because too often:

Stock wouldn't move with the market.
Good earnings not meeting expectations would tank the stock.
Biotech: Failed phase tests or lack of FDA approvals disastrous.
Unexpected company news resulting in halts.

and my favorite: At the mercy of analysts.:mad:
 
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