Diversification means building a portfolio that includes securities from different asset classes.
Since bonds tend to do well when stocks don't, you could construct a portfolio that includes a certain percentage of stocks and bonds. This helps ensure that at least a portion of your holdings is always doing well. Another way to diversify is to buy securities in the same asset class that are not affected by the same variables. For instance, entertainment companies, utilities, grocery stores, and airlines are completely different businesses. Depending on the country's economy, one or more of these industries might tend to perform better than the others.