How can investors mitigate company unique risk in their portfolios?

Investors can mitigate company-specific or unique risk, which is the risk associated with an individual company rather than the market as a whole, by diversifying across multiple stocks. This approach spreads investments across various companies and industries, which reduces the impact of any single company's poor performance on the overall portfolio. By holding a variety of stocks, the positive performance of some can offset the negative performance of others, leading to a more stable and lower risk investment portfolio.

Focusing on one stock would concentrate risk rather than mitigate it, as the investor would be heavily reliant on that single company’s performance. Market speculation typically involves taking high risks with the expectation of high returns, which does not address the unique risks associated with an individual company. Investing solely in bonds also does not mitigate unique risk related to equities. While bonds can provide stability and a fixed income, they do not result in diversification among stocks and will not specifically address the unique risks of any particular company. Thus, diversifying across multiple stocks is the most effective method for reducing company unique risk.