For “investors” there are two maxims they should remember: “Long Term” and “Diversification”. If they forget to focus on these two maxims they will lose focus on their one goal of investment.

Traders or Day traders generally take the opposite tact: They are “Short Term” and “Focus” their trading monies. Some traders make the mistake of diversifying their short term holdings.

Wise traders with larger capital bases tend to have a portion allocated with a view of long term investment and a smaller portion for short term speculative trades.

Diversification does not only mean holding different types of stocks - it also means diversifying into other financial instruments such as bonds, mutual funds, term deposits, real estate, etc…