Achieving True Diversification

I was inspired by Real Money contributor Kate Stalter's provocatively titled and insightful post, "Rules of the Game: Earnings Don't Matter," and wished to build upon her argument with some additional rules. As regular readers know, I am a strong advocate of only owning stocks whose earnings estimates are on the rise, so if I see any post telling me earnings don't matter, it will catch my attention!

Her argument is that, while earnings matter to individual stocks, they don't when you hold a portfolio of many stocks. Instead, she argues, what matters here is the overall behavior of the portfolio. I could not agree more! In fact, while I research companies individually before I put them into my fund, much of my research centers on how the incremental addition of a name will influence the characteristics and behavior of the overall portfolio....383 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.