How do you make a portfolio?

How to make a best diversified stock portfolio?

  • So, if i wanna have 2 stocks in my portfolio. I have Apple in my portfolio, so in order to achieve best diversified portfolio, what stock should i choose for my second one? I'm ...show more

  • Answer:

    You can't really have a diversified portfolio with only two stocks. However, you definitely want to avoid another tech stock. You could go healthcare, like a Johnson and Johnson (JNJ) or a consumer staple products company like Clorox (CLX), those would be good choices. Another would be a diversified industrial like General Electric (GE).

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You would choose a stock that is inversely correlated or at least not positively correlated. Use a correlation coefficient which you can calculate yourself or find websites which do it for you. If you want something less mathematical, choose stocks that tend to do well when your chosen stock does badly and vice versa.

Whiskey Tango Foxtrot

Pears

RAY

CSX a railroad stock - what CSX handles is the basic commodities that are the opposite of Apple technology - low tech, and in high physical quantities. It pays a dividend too! "The company transports crushed stone, sand and gravel, metal, phosphate, fertilizer, food, consumer, agricultural, automotive, paper, and chemical products; and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, industrial plants, and deep-water port facilities. It also provides intermodal transportation services through a network of approximately 50 terminals transporting manufactured consumer goods in containers in the eastern United States, as well as performs drayage services, including pickup and delivery of intermodal shipments; and trucking dispatch services." I assume you are planning to add a third and fourth stock etc as funds are available.

rarguile

You can't diversify much with two equities.

Love big words

You can't be diversified with TWO stocks...

Duck-Duck Goose!

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