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O Portfolio diversification is the smartest investment option Dollars & Sense Guest Contributor 47 | Thursday, October 20, 2016 | OAKVILLE BEAVER | www.insideHALTON.com wning individual stocks can be a silly investment strategy. In midAugust the Samsung Galaxy Note 7 went on sale. Five days later the rst phone exploded. In September, Samsung recalled 2.5 million Note 7s because of faulty batteries. A few weeks later, the replacement phones started to catch re. In early October, a Note 7 phone onboard a U.S. airliner caught re and the airplane had to be evacuated. On Oct. 11, Samsung stock lost $20 billion (U.S.) in value during one day. This is one of the most signi cant technological and public relations challenges we have seen -- that is a risk senior management of Samsung will have to address. This type of risk is something every investor should address. As stated above, owning individual stocks can be a silly investment strategy. Diversi cation is your ally when it comes to developing an investment portfolio. Putting too many eggs in one basket can backre. My recommendation is to invest in the overall stock market, not just a few individual stocks. When one speci c company runs into trouble it does not have any signi cant impact on your portfolio value. Some argue against the diversi cation approach, saying certain companies are Peter Watson safe and a portfolio of say 10 different safe stocks is all the diversi cation they need. Under the de nition of safe, Samsung would qualify as a safe stock. One third of all smart phones sold in Canada during the rst half of 2016 were Samsung. Consumers trust Samsung and four million purchased the Note 7 phone worldwide. Samsung is a world-wide technological giant. It has been a trusted rm. There are many examples of strong companies that experience woes. Nortel is the best example in Canada, and in the U.S., several very strong old established nancial institutions went out of business during the recession of 2008. Risk does happen and the best investment portfolio anticipates risk and plans ahead. When any seemingly safe stock loses signi cant value there are many who own that stock who are hurt. Many people gravitate to holding stocks they are familiar with and understand. Familiarity is not an adequate line of defence. Bad stuff does happen even to what you perceive as safe. You might be familiar with the popular notion in nancial planning: all market corrections have successfully recovered and market values have gone on to reach new highs every time. This logic is used to support taking a long-term investment approach. That only applies to very well-diversi ed investment portfolios. When you invest in just a few individual stocks, it is "caveat emptor," which stands for buyer beware. Re-examine your own investment strategy and to see if you could bene t from increasing the amount of diversi cation in your investment portfolio. -- Submitted by Peter Watson of Peter Watson Investments and Aligned Capital Partners Inc., MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner For more news,visit insidehalton.com/oakville-on. `Like' the Oakville Beaver on Facebook. 2016 ­ 2017 Seasonal Influenza (flu) Immunization Clinics It's easier than ever to get your free flu shot! Visit: · · · Your local pharmacy* Your doctor A Halton Region community flu clinic ALL YOU CAN EAT *Children under five years of age should visit either their doctor or a Halton Region community flu clinic. The Halton Region Health Department is offering free seasonal flu immunization clinics to Ontarians six months of age and over at the following times and locations. No appointments or health card necessary. Visit halton.ca/flu or dial 311 to learn more about the flu. Lunch or Dinner DiNe iN foR AllYou cAN eAt Date Monday, October 24 Wednesday, November 9 Wednesday, November 16 Monday, November 21 Thursday, December 8 Time 4 ­ 8 p.m. 4 ­ 8 p.m. 4 ­ 8 p.m. 4 ­ 8 p.m. Location Acton Arena & Community Centre Community Hall 415 Queen Street East, Acton Abbey Park High School 1455 Glen Abbey Gate, Oakville Bishop Reding Catholic Secondary School 1120 Main Street East, Milton Hillsview Active Living Centre Indoor Mall Unit # 9 318 Guelph Street, Georgetown Corpus Christi Catholic Secondary School 5150 Upper Middle Road, Burlington 4 ­ 8 p.m. 280 North Service Road W. @ Dorval 905-338-6228 10% oFF Dinner only. cash only & with this ad. the FLU ends with 201016 www.august8.ca If your child is under nine years of age and requires a second dose of influenza vaccine to complete their series, please dial 311 or visit halton.ca/flu for information on where to get the second dose.