Why is it better to own lots of diversified stocks over a specific set of target stocks?

Alot of people say that you should have a diversified portfolio. Why can’t I just choose the stocks which I feel have potential for growth? That might narrow my choices to a few sectors, though. If I buy too many stocks, my gains will be lost by too much other stuff going on.

What should be substitued for bonds with a diversified portfolio in a taxable account?

KnowledgeSeeker asked: I am working with ShareBuilder, and currently allocating 25% of my taxable portfolio (non-taxable accounts are not an option in this scenario) to BND. However, I would much prefer to use tax exempt bonds, but those do not appear to be available through ShareBuilder. Am I missing something on the tax exempt bonds? [...]