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Nobody wants to be subjected to an undue level of risk.
The most effective ways to reduce your degree of risk are to have an adequate amount of diversification , build an intelligent asset allocation , and invest in the appropriate assets for your time horizon . If you have your entire account in one stock and its value falls, the value of your entire account will decline by exactly as much as the stock fell. And so on. This dramatic reduction in risk continues until you reach a point of between 20 and 30 stocks. The goal is to become diversified enough to enjoy the upside benefits of good investing while minimizing your downside risk exposure.