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Definition: A concentration strategy involves picking a small batch of stocks, investing in them, and following them closely.
Advice: The opposite of concentration is diversification, which involves buying a large batch of stocks. Because diversification removes some of the investing risk, concentration is seen as a riskier strategy. However, the potential for returns is slightly higher and investors who own concentrated portfolios make the argument that they know more about their stocks because there are fewer of them.
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