Advantages and Disadvantages of Diversification?
473887
You have a chance of lowering your risk by not putting all of your eggs in one basket so to speak.\n\nIf you know what you're doing and you diversify anyway, you may water down your returns.  Warren Buffett is one of the more famous investors who doesn't believe in diversification because he thinks he knows what he's doing, and so far it's worked out for him.
211793
Advantages:\n\nCool\nHi Tech \nGood Salary\nNice benefits\nRelatively Secure\nEnjoyable\nGrowth prospects\n\nDisadvantages\n\nStress\nFamily life is somewhat compromised\nsometimes very monotonous\ntoo many engineers
1162656
The problem is that the farther out you go, the higher the risk.  Well, it isn't actually a problem but you need to understand that risk and return are tied together.  \n\nLet me give you an example...\n\n5+ years ago:  People looked at storage on the computer and thought that it might be a good idea to create a micro disk drive.  Something that would work in the computers that kept getting smaller and smaller.\n\nSounds look a good idea right?  And it was.\n\nToday:  Micro drives (1" drives) are available now in 4, 6, 8GB capacities.  Cool, right?  The problem is that flash memory had been increasing in density and dropping in price faster than most predicted. It's almost to the point where you can buy the same amount of storage in flash...and flash is cheaper!  This drove all the profit out of the micro-drive business.\n\nSo disruptive technologies can enter a market and interrupt what sounded like a good long-term plan.  In this case Flash Memory.  And if you think it is merely a matter of switching horses early enough...  Flash memory is facing a competitive technology as well a few years from now!  \n\nSeeing the future is tough!
86028
Depending on which country you're from you have many alternatives on how you can trade shares.\n\nYou can use plain shares, warrants, options, futures and CFDs.\n\nEach financial instrument has its own advantages and disadvantages.\n\nTo use plain shares you need heaps of capital.\n\nThe others are derivatives - or products that derive their value off the shares. These don't normally require as much money to gain a profit. But on the other hand potential losses are greater.\n\nYou should start by reading - reading a lot.\n\nThen by paper trading.
332190
I have to disagree with the 1st responder. You do have advantages that the fund managers do not have, and why is it that people get so excited about investing their money in a portfolio of stocks that include both good and bad. I am talking about index funds. \n\nSure any investor will make good bets and bad bets. That is just the way it is. But using a little common sense, you can make more good bets than bad bets. \n\nThe advantage that you have that the fund managers, making their millions do not have, is that you are not trying to invest a billion dollars. Investing that much money is not easy. It is almost impossible. \n\nLook for companies that have a history of increasing earnings and dividends and that are not selling at unreasonably high prices. Here are a couple BAC, CHL, HD, COP.
72424
it depends if you are going to invest it take the up front. your opportunity cost of not getting even the modest 3.5% gain from a CD would be worth the getting the 4mil up front. if you plan or know your going to go nuts take the over time so at least you cant blow it all at once
944945
manager tenures are important for the more successful ones like Bill Nygren at Oakmark get favorable reviwes in places liek morningstar (and deservingly so) performance look as far back as you can 5-10 year range and go from there. Cap size DOES reduce risk for the large cap sector is well established companies and can withstand periodicall losses in teh market. Small caps are generally younger companies and they will be hurt if the market suddenly tanks. Large cap doesn't have a better track record per say buy large cap would be something like Boeing and a small cap would be NTE big differences between the two. The more risk the more potetional for reward could happen. Barons does a review on mutual fund managers and they are very worthy a look (with Bill I even invested in his funds before moving to ETF's)
494634
Before making any decision (such as whether to acquire another business, build another plant, hire more people, invest in a new product, etc.), management should weigh the costs (potential risks included) vs. the benefits to be gained (profits).\n\nThus, for example, if you could make $500/unit of some new product that costs $1000 to develop, you would only need to sell 2 units to break even.  If it is feasible to sell 3 or more, according to this cost/benefit analysis, developing the new product is a good business decision. (bad example, but it should illustrate the point)
800198
give me all your money and ill help you...ha ok ok i wont joke...\n\nhonestly...it depends on how you want to weigh your options theres MANY ways to invest... And the more you can gain in an investment the more of a risk there is.  If you want a low to zero risk investment then you could simply but it savings or bonds...and save with compound interest.  (putting the interest earned back into the same account.)  If you definetely want to try stocks out which there's an adequate risk rate then you first need to know the difference.  There's common stocks and there's preferred stocks.  Common stocks are the most ...well..common stocks there are...Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.   You could also invest in prefered stocks.. With preferred shares, investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation, preferred shareholders are paid off before the common shareholder...That's about all i'll go into here...I know pretty much all the rest but should help...Just find a company you have faith in and go from there.
1035920
advantages:  \n\nif the companies whose stock you own make more money than generally the price of the stock goes up. \n\nsometimes companies whose stock you own will raise their dividend providing you with more money and causing the price of the stock to rise. \n\nIn the past the average increase in stock values has outperformed the yields in debt instruments.\n\nThere is the chance that by buying a particular stock you could hit a real winner, as buying MSFT during the early 80's or INTC or CSCO. \n\nInvestments in common stocks are very liquid. They can normally be liquidated at a moments notice unlike real estate investments.\n\nOne can invest in common stocks with very little capital. \n\nDisadvantages:\n\nThe companies one invests in may go bankrupt and  one may loose all of the investment\n\nCommon stock investments are subject to market fluctuations that have nothing to do with the particular stocks but instead with other events such as panics. \n\nInvestments in common stocks are effected by government policy which may adversely effect the value of the stocks, such as wage price controls, price caps, interest rate increases, tax increases, etc. \n\nInvestments in a particular company may be impacted by changes in technology.  \n\nInvestments in a particular company may be impacted by management ineptitude, incompetence, and illegal activity
87599
contact a stock broker or your bank, they should help you out with the documentation.\n\nlook at ratios such as P/E ratio and EPS mainly, and also read the investor prospectus as thoroughly as you can.\n\ninvesting in indices - will diversify away some risks - so look into that...
973369
The stock market is a good investment for young people because it beats most other investments in the long run.  The return can sometimes be as good as 20% with an average of 8-10%.\n\nThe drawback is risk, and our self-defense against risk is diversification, meaning spreading the risk across different companies and industries.\n\nHere's what you can do now:\n1. Open an account with TD Ameritrade at\nhttp://www.tdameritrade.com\n\n2. Consider buying as many shares of VTI as $2000 can buy.\nThe reason is that VTI represents the entire US stock market so well that it can reduce your risk.\n\n3. After you've made about $500,000, consider investing some of your money, say 20%, overseas.  You can easily do so with Oakmark.\nhttp://oakmark.com/
631755
The advantages of mutual funds:\n\nsome funds specialize in areas that the average investor would have a difficult time investing in, such as stocks of foreign countries and stocks of small cap companies for example. \n\nmutual funds allow for diversification without having to buy a bucket of stocks.  \n\neasy to purchase and sell for the small investor.\n\ndisadvantages:\n\n70% of mutual funds under perform the market in general. Not a great record. \n\nmany mutual funds are bloated. It is difficult to invest a billion dollars.\n\nmutual funds have to declare and pay capital gains once a year on which one will have to pay taxes. If you buy and hold a sound quality stock, that is not the case.
888570
Advantages\n# Profit from your passion, hobby or area of expertise...\n# Work from anywhere...\n# Start Easily...\n# Start Cheaply\n# Enjoy Huge Profit Margins..\n# Your Business is automated, no worries of inventory or late delivery\n\nDisadvantages :\n# People don't treat you right.. they think you are either one of those scammers or have porn sites :D\n# Because the investment is low.. there is too much competition. If you want to jump into this field, stick to it, it'll make money...\n# you become TOO lazy
373503
This depends on your goals, level of risk you are willing to accept, and many other factors.  For me, I like shares of small start-up companies.  Very high risk, but very high rewards IF it pans out.
178959
with index funds expenses are the key. if you have used one with super low expenses like Vanguard, there would be no reason to change. if you compare performance of all S&P 500 index funds you will find similar results that are usually better or worse only because of the fees. if you are in a fund like s&p or total stock market index, you are well diversified already.
643414
advantage:\nexpand your market and make more $\ndisad:\nlearning/dealing with different cultures, languages and laws\nunstable governments\ndifferent currencies