You Want Some Stocks That Go Down
Also bond quants, reverse split manipulation, concentrated funds and Tether.
One useful intuition of modern finance is that stocks are all kind of the same. Oh they’re not, they’re not, this isn’t true. But lots of stocks are interchangeable to some degree, particularly if you own a lot of them. A fair amount of the returns of many stock portfolios are determined by the returns to the overall market, to industry sectors, and to other well-known factors like value and size. You could construct a diversified portfolio of 100 stocks that is reasonably well correlated with the S&P 500 Index, and then you could construct a diversified portfolio of 100 entirely different stocks that is also reasonably well correlated with the S&P 500.
This is useful in various ways for investing: You can target the broad market return, or you can pick sectors or styles rather than individual stocks. Or you can go the other way, get really good at picking individual stocks, and then hedge out your exposure to the risks that are common to all the stocks.