Definition of a Stock Portfolio

Definition of a Stock Portfolio
Stock market investors build diversified portfolios to manage risks.

Identification

The stock portfolio refers to the compilation of individual stocks that you own. Complete investment portfolios include assets from various classes, such as stocks, bonds and cash reserves. You may also integrate alternative investments within your portfolio, which include real estate and hedge funds.

Features

Financial statements describe the makeup of your stock portfolio. Brokerage statements list your cash, stock positions and the total dollar amount of each investment. Information technology allows you to track the portfolio in real time through brokerage web portals.

Considerations

Portfolio diversification is an investment strategy designed to increase returns and minimize risks across various economic scenarios. Properly diversified stock portfolios include investments of different regions, industries and business size.

Misconceptions

No one-size-fits-all portfolio exists that is suitable for all investors. For example, younger savers will prefer small capitalization, or growth stocks for their profit potential. Retirees, however, typically gravitate towards less risk and mature companies.

Risks

Diversified portfolios cannot eliminate systematic risk. Systematic risk is associated with the failure of the entire financial system.