What Companies Should You Invest?
November 25, 2021
Owning many stocks in your portfolio may be a good investment strategy, writes Peter Watson.
My suggestion is to change your perspective on investing. Don’t focus on which companies to invest. Expand your focus to be much broader.
Considering having a globally diversified portfolio that could have many different companies. In effect, you are buying the market; you are investing in capitalism.
Stock markets around the world allow investors to own a significant number of companies. There are well over 10,000 publicly traded shares that you can choose from.
Administratively, to do this by purchasing shares in each company on your own is not feasible. There are investment vehicles including mutual funds and ETF’s that provide the opportunity to own many thousands of companies.
Stock markets have a long history of providing extremely attractive returns. That should be your focus. Yes, you could hit a homerun by investing in the next big tech stock but there are significant examples that investing in single companies that have been disappointing.
Having a strongly diversified portfolio helps you manage the risk. Some companies falter, others go out of business. For example, in a portfolio of just 10 stocks, if one or two of them perform poorly that will drag down the results of the total portfolio.
Diversification is your friend. There is safety in numbers.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Peter Watson provides wealth management services through Watson Investments – www.watsoninvestments.com