There are a lot of stocks out there and it is very risky to put all your investments into the same stock.

Diversification is the old story of keeping all of your eggs in one basket. Why not put your eggs into three baskets and carry them seperatly?

Benefit if you did this:        Risk reduced.  The probability of at least some of the eggs arriving unbroking greatly increases.

Drawback:        It takes longer get there.

The moral to take from this is that you would diversify if those eggs were important to you.  You would probably take the chance to save time if eggs were not important.  That is the decision you need to make with your investments.

If you are trying to build your nest egg, diversification should be important.  That said, spread your investments out beyond that one stock, beyond that industry, beyond that exchange, beyond your own country; even beyond that type of investment. You should diversify not only the stocks you invest in but also diversify into the bond market, the real estate market, the commodities market, the international markets, etc.).

Once you begin to accumulate wealth through investing, diversify your portfolio.