Warren Buffett said, “I never attempt to make money on the stock market. I buy on the assumption that they close the market the next day and not reopen it for five years.”
The market can be volatile daily due to short-term events, government closing, market sentiment changes, speeches byFed members, economic changes, and temporary news.
Since investments generally increase in price more than the decline, the averaging means that you purchase more shares when the price is down and fewer shares when the price is high and at below-average costs.
Concentration in any one stock, industry, or asset class is a hazardous strategy. Portfolio diversification selects different asset classes for potential returns and various risk-return traits.
Many index funds track the performance of an index such as the S&P 500. They have relatively low expense ratios, low minimum and provide excellent diversification.