For example, if we start breaking the business down into a few segments, you’ll start to notice that not every segment is created equally so if this business, the core focus of this business is to sell shoes that might be a large chunk of their business.
However, you have other parts of that business that might sell other items, like T-shirts. You might have another segment that sells sports equipment and another large part of that business could be in the personal fitness or consultation business.
Now you have these two main parts, shoes, personal fitness and you have some T-shirts and sporting equipment and let’s just say the last one they’re selling maybe like water bottles or just some basic little knick-knacks, it could be sunglasses.
Now you have all these areas that create this business. So this inventory that they have or these services that they provide create this business and what you want that even though there’s a large chunk of this is for shoes and another large chunk for personal fitness.
The fact is that if any one of these areas falls or collapses, you have the others to back it up. For example, if the shoe sales drop, you might still get a great amount of sales from t-shirts or sporting equipment or from the sunglasses and the water bottles or even from the personal training and personal fitness area.
If the sports equipment and the t-shirts dropped and they have weak sales, you still have all the other areas to make up for those sales. So that’s kind of how the portfolio works for a business is the same way that you can apply it to your own investing portfolio if you’re talking about the real world.
Portfolio in your Investments
So if we take this out to the real world what happens is, is now you might have a large quadrant. I’m just going to use up box to represent this.
You might have a large quadrant of your investments, so in one quadrant what you might have is trading and this could be stocks and other things and this other quadrant you could have real estate, so this could be homes and other investments of the land in value and this could be something like cars or antique dolls or stamps.
There are a lot of other areas that you could invest in. Now you have this that represents your whole 100% of all your investments in totality.
Now if we take this a little bit further and we take this trading area and we move this to the next area right here and we break it down further, what starts to happen is again you get somewhat a diversified area.
You might have let’s say one big sector of you have stocks, you can have this area that’s ETFs, from this ETFs section you might also have speculative plays and here you might have option trades or features.
So you’ll have a lot of areas right now, that again start breaking things down. So it’s kind of like going from the 80 to 20 and zooming in further and now what you can do is you can take this section and move it even further,
#investing #stocktrading #tradingportfolio #stockportfolio #trading #stockmarket
Posted at: https://tradersfly.com/blog/investing-or-stock-trading-portfolio/
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