Diworsification

One more investors book, One Up on Wall Street by Peter Lynch, taught me few things:

1.⁠ ⁠Invest in What You Know. 

⁠•⁠  Ordinary people can find great stocks by observing products, services, and trends in daily life, before Wall Street makes noise about them, and you read/hear about it in news.

2.⁠ ⁠Types of Stocks

•⁠  ⁠Slow growers – stable, low-growth companies (e.g. utilities).

•⁠  ⁠Stalwarts – large, reliable companies (e.g. Coca-Cola).

•⁠  ⁠Fast growers – small/mid companies with high growth.

•⁠  ⁠Cyclicals – tied to the economy (e.g. airlines, steel).

•⁠  ⁠Turnarounds – troubled companies with recovery potential.

•⁠  ⁠Asset plays – companies undervalued for their assets.

3.⁠ ⁠Do Your Own Research

•⁠  ⁠Don’t blindly follow tips or media.

•⁠  ⁠Understand the story behind the company, its fundamentals, and future potential.

4.⁠ ⁠Numbers Matter

•⁠  ⁠Learn to read balance sheets, earnings, P/E ratios, debt, growth rates, etc.

5.⁠ ⁠Long-Term View

•⁠  ⁠Time in the market beats timing the market.

•⁠  ⁠Be patient and let your investments grow.

6.⁠ ⁠Avoid Diworsification

•⁠  ⁠Don’t over-diversify to the point of weakening your portfolio.

Note, "Diworsification" refers to expanding into too many unrelated things, thereby reducing its overall performance and focus. Instead of strengthening, this kind of diversification actually worsens it — hence “di-worsification.”

7.⁠ ⁠Tenbaggers

•⁠  ⁠Focus on finding "tenbaggers" — stocks that can grow 10× in value.

With observation, logic, and discipline, regular investors can outperform professionals. Not me :)