Eliminating Non-Market Risk with Diversification

1. After purchasing 6 or 8 stocks in different industries, the benefit of adding even more stocks to your portfolio to lower non-market risk is small.
2. Overall market risk will not be eliminated merely by adding more stocks to your portfolio.

This information is from Joel Greenblatt’s book, You Can Be A Stock Market Genius. Keep in mind non-market risk are things like specific industry problems such as the price of oil dropping dramatically and affecting the oil industry stocks. The overall market could drop such as happened in 2008 and take all the stock prices down with it. That would be considered market risk.