Final answer:
The statement is true; diversification in common stock investing includes spreading investments across various industries and countries. This approach reduces the risk of significant loss due to underperformance in a single company or industry.
Step-by-step explanation:
The statement that common stock diversification strategies include diversifying among stocks across industries and among stocks across countries is True. Diversification is a fundamental investment strategy that entails spreading investments across various sectors, industries, and geographies to mitigate risk. By diversifying a portfolio, the investor is less likely to suffer significant losses when a single company or industry underperforms.
The concept of not putting all your eggs in one basket is key to understanding diversification. This approach helps in balancing out the performance of investments since some companies will naturally outperform others, and the overall risk of the portfolio is reduced. Mutual funds are a popular way for investors to achieve diversification as they pool money to buy a wide range of stocks or bonds. However, despite diversification, market fluctuations can still affect your investments as seen in the 2008 market downturn where U.S. stock funds declined significantly.