| The stock portfolio diversification referred to in this | | | | Sector and Industry. Once you have filtered down |
| article relates to spreading your investments over a | | | | your list of stocks you are ready to compare like |
| range of Sectors and Industries. This is commonly | | | | with like or companies of similar financial structure |
| used from a risk management perspective to avoid | | | | against each other. This is the additional benefit when |
| putting all of your eggs in one basket as some | | | | considering how to diversify your portfolio as you |
| Sectors will prosper compared to others in different | | | | can now quantify similar companies against each |
| economic conditions. | | | | other to analyze your investments. |
| The usual problem with diversifying your portfolio | | | | Performing a Fundamental Analysis of the most |
| across the available Sectors and Industries of your | | | | recent reported financial results and historical |
| local stock exchange is firstly finding a list of | | | | performance of these companies will help identify |
| companies that make up a Sector and then being | | | | companies that are outperforming the rest and also |
| able select an investment that is likely to outperform | | | | companies to avoid. Hopefully you will see how a |
| the other companies from that list. A stock market | | | | stock analysis of this nature will outperform a generic |
| analysis and investment research program like First | | | | stock screening approach which is limited by applying |
| Class Trader makes this easy. For example, you can | | | | rules of thumb criteria across a range of Sectors and |
| quickly obtain the full list of stocks listed on the | | | | Industries comparing companies whose financial |
| NASDAQ Composite (~2800) and then filter down by | | | | structures can vary immensely. |