4. Investment Strategies That Turn Into Portfolio Nightmares

“Adventure. Excitement. A Jedi craves not these things.”

Yoda, The Empire Strikes Back

There are some stocks that are going to outgain all comers—Apple Computer comes to mind; Google was certainly ruler of all it oversaw for years—but most of the returns that investors can generate now will come from effectively dividing up one’s assets among different asset classes rather than worrying about individual names. Investors in recent years have generally been better off sticking to a broad investment strategy and eschewing individual stocks, which, by themselves, can do a variety of damage to portfolios.

The S&P 500 had a terrible year in 2008, losing 37 percent. But it is possible to ...

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