Investing in individual stocks can be highly rewarding. However, there can be some substantial risks involved if there is bad news about your stock pick.

Here are just a few examples from "TradingMarkets.com":

* Amazon.com ( AMZN) Q2 Earnings Fall, Miss Estimates; Boosts FY06. AMZN shares plummet over 22 (7/26/06)

*Bristol-Myers Squibb ( BMY) Q2 Profit Declines On Higher R&D Expenses; EPS Beats Estimate; Reveals Probe Into Plavix Settlement; Stock Plunges ( full story). BMY shares drop by over 7 (7/27/06)

*Aetna ( AET) Q2 Profit Down 1 (7/27/06)

* Eastman Kodak ( EK) Q2 Loss Widens On Charges; Signs Deal With Flextronics ( full story). EK shares drop by over 13 in today's session. (8/1/06)

*Whole Foods ( WFMI) Q3 Profit Up But Sales Fall Shy Of Street View ( full story). WFMI shares drop by over 11. (8/11/06)

*Bally Total Fitness ( BFT) Cuts Cash Contribution Outlook; To Pursue Other Financing Options; Reveals CEO Resignation ( full story). BFT shares get slashed today by over 30 On Lower Expenses And Rise In Gross Margin; Revenue Down 3 in today's session. (8/17/06)

*Merck ( MRK) Says It Disagrees With Court's Decision To Set Aside 2005 Defense Verdict In Humeston V. Merck ( full story). MRK shares tumble by 6%. (8/17/06)

Were you holding any of the above stock picks? These are not small "fly by night" companies. The above companies are probably familiar to everyone. Nevertheless, stock holders in the above companies saw their portfolio values drop significantly in this new driven market where even a slight miss to analyst expectations can cause a stock to drop precipitously.

It is for this reason that I invest exclusively in Exchange Traded Funds (ETFs) and No-Load Mutual Funds. These investment vehicles enable me to profit from the stock market while reducing risk through diversification.