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Thursday, December 15, 2005

Am I diversified?

Like I've mentioned in the past, I like reading Jim Cramer's stuff on http://www.thestreet.com. I have to say, the most common question asked is, "Here are the stocks I own [and they list them]. Am I diversified?"

I used to track my portfolio through the Fool, but alas. Their portfolio function was deleted, either temporarily or permanently. Either way, it sucks. That's why I also track my portfolio through just plain Excel. I have several worksheets within Excel (dividends, individual portfolio breakdowns, industries, holding distributions, etc). I use my industries page to follow which industries I'm in, and I created a pie chart that shows this graphically.


(Sorry it's a little fuzzy) Yes, I realize I'm heavy in the "restaurants and bars" industry. I think it's alright for now, because they're not all technically restaurants (i.e. Panera Bread, Starbucks, McDonalds).

Anyway, back to the original point. How do you not know if you're diversified? Is it that hard to look it up yourself and figure it out? Each stock-type website (MSN Money, Yahoo! Finance, etc) has a company snapshot sort of page. Just look up all your companies, and see for yourself. I gotta say, if you're investing, and you honestly have no clue what industries you're investing in, you must not know much about your companies. If you don't understand your companies, how do you know you're investing in a good one? A fine point to ponder for the time being.

Let me leave you with another point to ponder - If you're diversified within industries, I wonder - are you diversified internationally?