The six months before June 2008 have shown business diversification in very favorable light for stocks. Innumerable portfolios have come to grief because of their over-dependencies on one or the other segment of the world economy. Almost all stock investors, whether by hindsight or foresight, must look at stocks of diversified companies to weather the current market conditions until the next upswing.

Capital, human, physical and intangible resources limit diversification. A management team may wish to enter a new field of activity, but lack the capabilities to compete profitably and in sustainable ways. A wide client base gives a corporation most of the benefits of diversification, without requiring such diverse resources.

This is the case of a small-capital member of the Electronic Instrumentation & Controls Industry from Quincy, MA. Horticulture, foods, mining, aerospace, and logistics are examples of the breadth of industries which this company serves. It makes power transmission and motion

Bull runs show diversification in poor light. The Conglomerates Sector is a nearly inevitable victim when one or the other industry experiences a surge in demand. Diversified companies cannot refocus their resources to leverage such opportunities fully.

The shoe changes feet in troubled stock investing times. A conglomerate has best chances of surviving a depression. Diversification is also a meaningful hedge against rampant inflation. This approach can help in stock investing as well.

The herd mentality is a bane of stock investing. We pour hard-earned capital to copy what the media and stock brokers tell us others do. The benefits of contrarian stock investing deserve greater attention. A tangible step in this direction is to diversify every stock portfolio.

Not all conglomerates succeed. Some lose the benefits of operational autonomy because they are top-heavy. Others build high fixed costs by decentralizing even common management functions. The centralization-decentralization balance drives business success in