What is Diversification
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Diversification
An investment strategy in which you spread your investment dollars among industry sectors
Portfolio
A collection of investments owned by one individual or organization
Industry
A group of companies that make the same products, i.e. pharmaceutical companies
Sector
A group of stocks, often in one industry. The performance of any single stock in a sector can be measured against the performance of the group. Pharmaceutical companies are considered in the health care sector for example
Index
Reports changes, usually expressed as a percentage, in a specific financial market. Each index measures the market from a specific starting point. Some indexes are: Dow (NYSE), S&P 500 (NYSE), Russell (NASDAQ), etc.