I have a question for you which is, admittedly, a trick question: Should you invest in technology stocks, such as Apple?

My answer: Yes, certainly.

Another question (also a trick question): Should you invest in the stocks of entertainment companies like Netflix?

My answer: Again, yes, of course.

A third question: Should you invest in energy companies, such as ExxonMobil?

My answer: Again, yes.

You might wonder why I’m asking these questions, and why I’m answering “yes” to all of them. Does that mean that technology and entertainment and energy companies are my favorites? Do I see an advantage that they hold over others?

No, I have no favorites, and that is specifically the topic I want to address here.

Oftentimes folks will ask me a question along the lines of one of my trick questions above — “Should I invest in…?” I am always cautious when answering these questions. To be sure, each inquiry is grounded in observable facts: Smartphone usage continues to drive growth for Apple. Consumers love the original programming on Netflix. And a recovery in oil prices has enabled Exxon to shake off its four-year slump. Yes, all of these things are true — right now. But you don’t have to look too far back to find a time when each of these companies was not the stock market’s golden child. Apple nearly went out of business before Steve Jobs came back. In 2011, a strategic blunder caused Netflix to lose 800,000 subscribers and 75 of its market value. And a 2014 decision by OPEC caused Exxon’s sales to get cut in half.

These aren’t anomalies; things like this happen all the time. In just the past few months, we’ve seen a tech company face a congressional inquiry, a drug company suffer a rejection from the FDA and a car maker contend with a fatal malfunction. In each case, the company saw its stock price dip. Companies generally recover from these episodes, but in the midst of it, it can be awfully hard to know when or how it will end.

In recounting this history, I’m likely not telling you anything you don’t already know. But these stories carry an important lesson. We all understand the risks inherent in individual companies, and this unpredictability is the reason why I do not recommend buying individual stocks. But, sometimes, as an alternative, I see people opt for “sector index funds” — that is, funds that own all of the companies in a given industry. For example, they might buy a technology sector index fund, which offers a bundle of 100 or more tech companies in one package. Because of the apparent diversification, and because the word “index” appears in the name, funds like this might appear to be good investments. But I urge you to use caution. These funds carry a significant risk that may not be as obvious as the risks carried by individual stocks: In many cases, all of the companies in a given industry will be subject to the same external forces. Oil prices impact all energy companies, interest rates impact all banks, regulation impacts all health insurers, and so on. And when they strike, these forces will often impact all of the companies in that industry. To be sure, the impact will not be evenly distributed, but the stocks will move enough in unison to impact the entire sector. As a result, the diversification benefit offered by a fund like this may be far more limited than you would expect.

This is why I have no favorites and, as a result, believe so strongly in owning total-market index funds — that is, funds that own companies in every industry. While this may limit your profits, it will also limit your losses, and I see that as a fair trade off, especially since, historically, the total stock market’s returns have been very attractive.

Even with a diversified portfolio, you can always count on the stock market to deliver moments of roller-coaster-like terror. But, by avoiding overly concentrated bets, on individual stocks or on individual industries, I believe you’ll be able to better limit those unpleasant moments.