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Array and Diversification

noun

  • An orderly arrangement.
    • usage: "an array of troops in battle order"
  • An impressive display.
    • usage: "it was a bewildering array of books"; "his tools were in an orderly array on the basement wall"
  • Especially fine or decorative clothing.
  • An arrangement of aerials spaced to give desired directional characteristics.

verb

  • Lay out orderly or logically in a line or as if in a line.
    • usage: "lay out the clothes"; "lay out the arguments"
  • Align oneself with a group or a way of thinking.

noun

  • The act of introducing variety (especially in investments or in the variety of goods and services offered. )
    • usage: "my broker recommended a greater diversification of my investments"; "he limited his losses by diversification of his product line"
  • The condition of being varied.
    • usage: "that restaurant's menu lacks diversification; every day it is the same"

Diversification is an investment strategy in which you spread your investment dollars among different markets, sectors, industries, and securities. The goal of the strategy is to protect your the value of your overall portfolio in case a single security or market sector takes a serious downturn and drops in price. A well-diversified stock portfolio, for example, might include small-cap, medium-cap, and large-cap domestic stocks, stocks in six or more sectors or industries, and international stocks. Studies indicate that diversification can help insulate your investments against market and management risks without sacrificing the level of return you want. Finding the diversification mix that's right for you depends on your age, your assets, your tolerance for risk, and your investment goals.