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Chapter 1. Sages and Charlatans: Avoidin... > Red Flag 10: Diversify or Bust: Too ...

Red Flag 10: Diversify or Bust: Too Much Money in One Stock May Ruin You

This is just about the oldest advice in the book, and I am not going to spend long on it. Most people know by now that to concentrate all their money in only a few stocks is extremely risky, though clearly an Enron or a WorldCom was needed to get this harsh message through to some. A number of Enron and WorldCom staff, for example, held all or most of their investment dollars and pension funds in the companies’ stocks. Well, that was an awful lot of trust they put in Enron or WorldCom management, a trust that was, as we know, betrayed.


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