Sylvia Kwan has nearly 35 years in the investing industry, as well as a PhD in engineering economic systems from Stanford, and she helped build Ellevest from the ground up as our Chief Investment Officer. So you could say she knows a thing or two about investing. We decided to bottle up some of that golden knowledge for you in our new video series, “Hey Sylvia, Quick Question.”

Up next: Can I lose everything in the stock market?

Sylvia’s answer:

You can lose everything in the stock market if you put all of your money in a single stock. And that’s because no one can predict how markets will perform, let alone a particular stock.

So, let’s look at a recent example: Sears. Sears was started in 1892 and grew to be one of the largest retailers in the US by 1989. In October of last year, 2018, Sears filed for bankruptcy. So yes, if you had put all of your money in Sears at its high, you would be virtually left with nothing today.

So that’s why it’s important to diversify — to have an investment portfolio that’s invested in many different stocks of different industries, different geographies, as well as bonds and alternatives. Doing so helps protect your investment portfolio against unforeseen events that impact a particular stock.

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