The Rolls-Royce share price crash shows why investors should diversify among UK shares

first_img Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. Peter Stephens owns shares of Rolls-Royce. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Peter Stephens | Saturday, 7th November, 2020 Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Since the start of the year, a wide range of UK shares have delivered disappointing performances. Among them is the Rolls-Royce share price. It’s currently down by two-thirds year-to-date. That’s a significantly worse performance than the FTSE 100’s 22% drop over the same time period.The company’s stock price has been negatively impacted by lockdown measures that have led to cancelled flights. The cause of this is the coronavirus pandemic, an exceptional event that couldn’t have been reasonably foreseen by any investor.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…This highlights the need for investors to maintain a diverse portfolio of companies when investing money in the stock market. Doing so can reduce risk, and improve long-term returns.Falling UK shares in the stock market crashOf course, many other UK shares have also fallen heavily alongside Rolls-Royce as a result of the stock market crash. However, this isn’t an especially unusual event. Certainly, bear markets of the variety seen earlier this year don’t happen frequently.But the history of the stock market shows corrections and downturns are fairly common events. Indeed, during an investor’s lifetime, they’re very likely to experience a number of them. At such times, the values of their holdings could come under severe pressure.Trying to predict when the market will fall is an incredibly tough task. Previous bear markets, such as the 1987 crash, the dot com bubble, and the global financial crisis were forecasted by some investors. However, determining when to sell stocks prior to the event occurring can prove to be largely dependent on good fortune.Moreover, selling UK shares too early prior to a market crash, or misjudging when it when occur, may mean lower long-term returns.The importance of diversificationThe Rolls-Royce share price crash and the decline of a wide range of other UK shares this year highlights the value of diversification. It entails an investor spreading risk across a wide range of companies, sectors, and regions so they’re less dependent on a small number of businesses, industries, and countries for their returns.This may not necessarily mean they avoid the impact of bear markets. But it does mean they’re less likely to be stuck with a small number of the stock market’s worst-performing stocks. It also doesn’t require any capacity to accurately predict when a stock market crash will occur.Buying British shares todayInvesting money in UK shares after the stock market crash may seem like an unattractive idea to many investors. Especially those who’ve been impacted by the Rolls-Royce share price decline.However, buying stocks after a market crash can be a logical strategy. They trade at lower prices that can lead to impressive capital returns in the long run. As such, building a diverse portfolio of British shares today could be a logical move. They could ultimately produce a surprisingly large nest egg in the long run. Our 6 ‘Best Buys Now’ Sharescenter_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Peter Stephens Simply click below to discover how you can take advantage of this. The Rolls-Royce share price crash shows why investors should diversify among UK shares I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. 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