Managing Editor’s Note: Today, we’re sharing some wisdom from our friend, expert trader Larry Benedict.

Wall Street is full of all kinds of advice…

For example, many experts recommend diversifying your portfolio.

This could mean buying a gold ETF… maybe some tech stocks… exposure to utilities, industrials, and energy… and perhaps a few consumer staples stocks to round it all off.

But I recommend going against this conventional wisdom…

Because that has been one of the keys to my success over the past 40 years.

Let me explain why…

Diversification Has a Downside

Wall Street tells you to diversify to prevent a big drop in one stock from causing a catastrophic hit to your account.

That’s true enough. There’s a reason for the idiom: “Don’t put all your eggs in one basket.”

Yet if you do diversify, one of your stocks can shoot up… but it won’t improve your overall results much, since it will just be a small percent of your holdings.

Over time, a broad portfolio can still bring a meaningful return… but most people aren’t going to achieve wealth this way in less than a couple of decades at best.

And that’s not the only downside…Once you have this range of investments… how do you keep track of it all?

If you have 20, 30, or 40 things in your portfolio, for example, there just isn’t enough time in the day to pay attention to each one’s performance.

And that’s before you consider all the economic news and earnings reports you need to keep tabs on as well.

That’s why I see a better way…

My Favorite Tool

I’ve made trading the focus of my career. And for traders, specialization – not diversification – is critical.

In the markets, that means choosing a “theme.” This can be a single stock or a sector ETF. Or it could even be an index like the S&P 500 or Nasdaq-100.

Instead of splitting your attention among a dozen or more assets, you should dig deep into your choice. Learn all about that stock, and follow it closely as you trade it.

Then once you’ve traded that theme for all its worth, you can go on to the next one showing opportunity.

Focusing on one theme at a time led to my hedge fund being ranked in the top 1% by Barron’s multiple times.

And it has meant huge wins for my followers at The Opportunistic Trader.

That’s because we combine this specialization with my favorite trading tool: options.

Now, Wall Street likes to tell retail customers that options are risky.

But when you know how to use them properly, they can supercharge your returns – while allowing you to control your risk.

For example, in six days, my One Ticker Trader readers were able to bring in a 100% gain using options earlier this year.

Then, in just over two weeks, we saw a 69% gain. After that, we made a 127% win in nine days.

And going into each trade, we knew the exact dollar amount we were putting at risk.

That’s how we can build meaningful returns in a much shorter time.

While we don’t win every time, the wins we see – and the speed with which we achieve them – can make a big difference to your bottom line.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict