GE stock: Is it the magic bullet?

— -- A: It's so easy to buy large baskets of stocks for little cost. That's why I'm not sure why investors are so infatuated with that elusive "one stock" to buy.

Every few months, another reader will ask if they should put a big chunk of their portfolio into stock X. When times are good, and we're in a bull market, investors want to pour all their money in a promising small company to maximize their gain. And when times are shaky, the mystical one-stock to buy is usually a big company, such as General Electric.

Perhaps a reader can explain to me the attraction of concentrating your entire portfolio in one stock? Doing so is very risky, as I discussed in a previous Ask Matt column here.

Too much faith in one company — and an unwillingness to sell and cut your losses, has been a big reason many investors suffered huge losses during the most recent bear market. Making thing worse, investors tend to fall in love with single stocks and ride them all the way down. You can read more about that here.

My suggestion is to never put 70% of your portfolio into shares of any one company. It's just too easy to build a low-cost, diversified portfolio, which is much less risky.

Read this for tips on how to diversify easily.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz