Diversification is a fundamental investment technique to reduce the amount of risk in a portfolio, as with the saying “don’t put all your eggs in one basket.”  If a significant portion of an investor’s portfolio is concentrated in only a few investments then the amount of risk may be higher than the investor is willing to accept.  If a broker recommends investments and strategies yet fails to diversify an investor’s account, taking into consideration the investor’s investment objectives and risk tolerance, the broker may be liable should the portfolio experience losses as a result.

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