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Blind Diversification Dilutes Your Returns.(A)(INVESTOR'S CORNER)

Investor's Business Daily

| April 01, 2002 | COPYRIGHT 2002 Investor's Business Daily, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Byline: DAVID SAITO-CHUNG

Suppose you have a billion dollars to invest. Spreading the risk makes tons of sense.

To do that, you could buy a wide mix of securities. Blue chip stocks in uptrends. High-grade corporate bonds. Short-term govvies. Mortgage-backed securities. Real estate. And on and on.

But you're not Bill Gates. You have a nest egg and simply want to make it grow. Still, should you put your money in many baskets?

If you seek a dull return, sure. If you aim to double or triple your money in a bull market, never.

Instead, squeeze your cash into a handful of growth stocks. Despite the recent bear market, they're still the fastest investment vehicles to wealth.

Find out which sectors are leading the market. Then look for the ones with the best earnings and sales. Wait for them to form solid bases and buy them when they break out on surging volume.

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