What is a "diversifiable risk" versus a "non-diversifiable risk"?
There are two types of risk. There's the traditional form of risk, which is a diversifiable risk, where you can eliminate a risk by owning many securities. A non-diversifiable risk is actually the risks we want to take, since we can't eliminate those risks. Non-diversifiable risks are the risks that give us the returns that we're actually going in and investing. Those are the risks we want to seek out as investors: the non-diversifiable risks.