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<p>[QUOTE=&quot;medoraman, post: 1404698, member: 26302&quot;]Well, my answer to this is diversification. The most dangerous thing anyone can own is only one type of asset. Assets like stocks are priced assuming that they are part of a diverse portfolio. Therefor, a lot of the risk in holding this asset is diversified away, (for example, if you hold a gold mining stock it may go down in good economic times, but that loss would be offset by other stocks that would go up). If you balance your portfolio, you are minimizing potential overall risk while getting the highest balanced returns. The market prices of assets expect this, so if you are holding way too much of a certain asset, (anything, could be banks, miners, real estate, physical gold, etc), you are taking much higher risks for the expected return than everyone else. </p><p><br /></p><p>Any kind of huge holding in your portfolio is by definition too risky. Yes, you may get lucky and hit it big, but odds are you will be taking too much risk for the returns you get back. Just like I never advocate 100% PM, I never advocate 100% ANYTHING, even US bonds. Having your assets spread out among a lot of really good bets that are each different than the other, (doesn&#039;t count if its 4 types of PM, or 15 different bank stocks), is the only semblance of &quot;safety&quot; nowadays. </p><p><br /></p><p>I don&#039;t know what to say about your penny stocks, I have always likened them to basically playing a slot machine but almost guaranteed to lose to insider traders, so I have never tried.[/QUOTE]</p><p><br /></p>

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