What I Learned When Stocks Tanked

Watching your portfolio increase in value is a blast. But watching as stocks decline is far more instructive. The market has recently provided that unpleasant learning experience, and I learned something unexpected.

- Kathy Kristof

To back up a minute: In my opinion, you should always have the bulk of your portfolio in index funds. These funds give you diversification without the hassle of managing a substantial portfolio of hand-picked securities.

However, there are also good reasons to invest in individual stocks, as I’ve done with the Practical Investing portfolio. Those reasons include controlling for a specific objective, such as boosting yield or reducing risk, and learning about how markets and individual stocks work.