It is important to beware of certain pitfalls when managing your portfolio. The first is overinvestment in related industries. You want to pick industries that are isolated from one another in terms of risk.

Make sure to keep your investment liquid, and that means keeping a percentage of your investments as cash. This will allow you to move on opportunities as they prevent themselves rather than being forced to sell one asset to buy another.

Most investors have too much in domestic investments. Don't be afraid of foreign markets. Non-U.S companies often have extremely good return rates, and many regions are experiencing growth that the U.S. hasn't seen for a very long time. It is particularly critical to do your homework when investing in foreign companies, since you may be exposed to wild fluctuations in currency that rapidly change the value of your assets.

Pay attention to your portfolio as well. Do not feel so obligated to tinker with it that you are essentially day-trading, but keeping on eye on your investments will ensure you don't get caught by surprise if something sudden happens. This will also let you rebalance your portfolio when if the value of one particular sector changes.

Setting stop orders on your shares will help avoid large losses if the prices of those shares change suddenly. Be sure to set these if you go on vacation to guard your assets while you're away.

Thinking of managing your portfolio like steering a ship will help you understand the mindset that should guide your actions as you invest.