Reuters ran a piece last week asking a question I've heard, and answered, more times than I can count: why is it bad to invest in a single stock? The short version is that it isn't always bad, but it is always risky, and most people don't appreciate how much.

Do the math with me, because the math is what convinced me. Say you put $10,000 into one company and it has a genuinely bad year, dropping 40 percent. You now have $6,000, and to get back to even you need a 67 percent gain. A stock that falls 50 percent needs to double. Losses and gains don't offset each other evenly, and that lopsidedness quietly wrecks portfolios that looked fine right up until they weren't.

The fix is boring and it works. Take an S&P 500-style index fund: one company out of 500 is roughly two-tenths of one percent of the fund, so even a total wipeout of a single holding costs you pennies on the dollar. The same event, owned directly, can cost you everything you put in.

None of this stops people from wanting the one big winner, and I understand the pull. In my experience the folks who pick the stock that triples tell everyone at the barbecue, and the folks who picked the one that went to zero mostly keep quiet. I can't prove that pattern with a study, but forty years of listening to people talk about their money tells me the winners get overrepresented in casual conversation. That's how the illusion survives.

If you simply must own a single stock, cap it. Five percent of your portfolio, maybe ten at the outside, in money you could lose without changing your dinner plans. The rest belongs in something diversified, cheap, and dull. Ask yourself, plainly, how much of your savings is riding on one company's earnings report this quarter. If the answer makes you squirm, good. The discomfort is doing its job.

Patience and consistency beat brilliance, and they have never once required you to be right about a single ticker.

As always, this is my perspective, not professional financial advice. Talk to a real advisor before making big moves.