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What is your take on investing in competing companies to limit your losses? Say, buying stock in both Bell and Rogers - Being the two dominant providers in Canada, if one goes down the other will surely go up, right?

Or Sobeys and Loblaws, for example. I mean people gotta eat and make phone calls after all.

This may all be hogwash, I'm very new to investing (and poor) with only a couple years of playing with mutual funds from my bank. I'll have a substantially higher income once I'm out of school though and want to learn how to work with my money so I'm not completely clueless and lose everything in the first few years.
 

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Telus could prosper at the expense of Bell and Rogers.

If selecting individual stocks, I would choose only one, the one I think will achieve the highest return. For me it means fewer annual reports to read each year : )
 

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If I was concerned with diversification I'd buy a stock of a company in a different industry. While it is true that if one is doing well at the expense of the other they'd balance out, it is also true that when the industry suffers they all do... to varrying degrees of course.
 

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It is generally better to diversify between asset classes (e.g. stocks, bonds, cash, commodities, reits) and different industries first, before you invest in a second company in the same industry. They tend to go up and down together. You will get more reliable returns if your investments do not correlate with each other.

I am assuming that since you are still in school, you are not yet sitting on a ton of cash. So it will be difficult for you to diversify when buying stocks. You can diversify by investing in low cost index mutual funds or ETFs until you have tens of thousands invested and qualify for lower trading fees. Then if you want you can make a switch to individual stocks (say ten or more different ones - one bank, one telecom, one grocery chain etc.)

It is seldom mentioned - but it is important to "diversify time". In other words, be invested for a lot of years. Then you will be less vulnerable to bubbles, secular bear markets and so on, and have more opportunity to profit from a secular bull market or two.
 

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What is your take on investing in competing companies to limit your losses? Say, buying stock in both Bell and Rogers - Being the two dominant providers in Canada, if one goes down the other will surely go up, right?

Or Sobeys and Loblaws, for example. I mean people gotta eat and make phone calls after all.

This may all be hogwash, I'm very new to investing (and poor) with only a couple years of playing with mutual funds from my bank. I'll have a substantially higher income once I'm out of school though and want to learn how to work with my money so I'm not completely clueless and lose everything in the first few years.
The Canadian telecom industry that you are using as an example is an oligopolistic market.
I don't believe there is any net growth advantage in holding shares in all the competitors.
If you have reason to believe that one of them may emerge as an undisputed market leader at some point in the near future, place your bets there.
You may of course hold all those companies as part of an income producing portfolio, since they tend to be good cash flow payers.
But playing one against the other within your portfolio would be counter productive.

However, if you are able to identify an industry that exhibits features of monopolistic competition in the near term, you could try and capitalize on unusual profits for the companies for a short period of time.
But you have to time your exit properly before the stock price falls and plateaus.

That said, given your personal profile, you may be better off diversifying by using index funds or ETFs.
Look into the ETFs with the tickets XIC & XSP.
Also, read about the couch potato portfolio on the Canadian Business website.
 
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