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Investing in the portfolio of stocks diversifies risk, also need to ensure that portfolio does not contain highly positively correlated stocks, otherwise diversification has little impact on risk reduction.
investing in a portfolio of stocks will make diversification this will lead to reduce the risk more than investing in one stock.
( don't put all your eggs in one basket )
Because investing in a portfolio of stocks make diversification which lead to minimize the risk level.
When an investor doesn't have a set of strong and proven rules for choosing best stocks (best stocks: stocks with high probability of moving in a direction fast and more than others) then he/she can try to invest in a portfolio of stocks but it will be generally a poor choice because gain and risk will be, on average, the one lower and the other higher. So the answer to the question is: because the investor has not a set of strong and proven rules for choosing that one (and maybe neither a good financial preparation). Of course every investor has to follow his/her investments constantly because the best stock of today can be the worst of tomorrow.
The investment in a portfolio of stocks diversify the risk of investment which in turn makes the risk under control.
Invest in a bunch of stock always reduce the risk but keep in mind the diversification must be in uncorrelated stocks not in correlate. But many times history its prove that as in financial crises of 2007 diversification in stocks even in different assets class not worked very well as in panic situation every body rush to liquidate their holdings no one bothering about diversification so means diversification did not work well also when we need it most.
Investing in a portfolio of stocks will reduce the exposure of the investor into an industry, company or in a specific asset class and reduce the unsystematic risk of the investment. However, correlation of the different categories of stocks/assets in the portfolio needs to be negative. Furthermore, diversification of stocks should also not be in the same industry vertically integrated in order to increase the negative correlation.
The most important factor when one invests in a portfolio of stocks compared to a single stock is "Diversification".
Diversification helps reduce unsystematic risk. Also there is a possibility that certain stocks in a portfolio are negatively co related and thereby help in achieving benefits of diversification.
