Diversification is a key concept in stock investing that involves spreading your investments across different asset classes and industries to reduce risk. By investing in a variety of stocks, you can protect your portfolio from the volatility of individual stocks or sectors. For example, if you only invest in one industry and that industry experiences a downturn, your entire portfolio could suffer significant losses. However, if you have a diversified portfolio that includes a mix of stocks from different industries, the impact of that downturn may be mitigated. Additionally, diversification can help you take advantage of different market trends and opportunities. By investing in various sectors, you can potentially benefit from the growth of one industry even if others are struggling. In conclusion, diversification is a fundamental strategy for building a resilient and successful stock portfolio. It helps manage risk, smooth out market fluctuations, and increase the likelihood of long-term investment success.