Is this portfolio <span title="diversified-Pfizer,Novartis,">diversified-Pfizer,Novart...</span> Energy Conversion Devices,Urban Outfitters,& GM?(6months ago?)?

Question

If bought December 31st of 2007, would this be a diversified portfolio and why? Also if I would choose these why would I choose these with regard to Beta?

Answer 1

If you want a diversified portfolio go with an index mutual fund or ETF (exchange traded fund).  also no single stock should make up more than 20% of your total portfolio. Most of these are considered large cap stocks.  Remember there are also mid cap, small cap, micro cap, and foreign stocks out there. (cap is value of stock price per share multiplied by number of shares) and beta is how much movement you see in the stock I think it is in terms of % of price and not a direct $ move.

Answer 2

To check for diversification, I would use a correlation tracker such as this one: http://www.sectorspdr.com/correlation/

A mistake people make is that they buy many different stocks in sectors that are closely related to each other and think that their portfolio is diversified.