You don’t want to own only US small-cap stocks, for example, or funds that own only small- cap stocks. If they didn’t perform well for ten years, that would really suck. If, however, you own small-cap stocks, plus large-cap stocks, plus international stocks and more, you’re effectively insured against any one area dragging you down. So if you were to invest in stocks, you’d want to diversify, buying all different types of stocks or stock funds to have a balanced portfolio.
