Greatest safety – put all your eggs in one basket.

“If someone puts all their eggs in one basket, they put all their effort or resources into doing one thing so that, if it fails, they have no alternatives left.” (Collins dictionary)

Frightening for investors, isn’t it?

But then, from Gerald Loeb, the most quoted man of Wall Street before Warren Buffet:

“The greatest safety for the capable I might say lies in putting all one’s eggs in one basket and watching the basket.”

Loeb’s book The Battle for Investment Survival was published when Buffett was three years old. It has been reprinted countless times; its many pearls I have stood the test of time.

These are arguments for and against diversification.

I once bought a stock the price of which doubled in one day! However, it was such a small percentage of my overall portfolio that the price increase was meaningless. A large price decrease would have been equally meaningless.

Several of our members had more than a hundred different securities in their portfolios when they joined. Many were acquired when commissions were significant. (They no longer are.) Their brokers loved it. To the investor, what possible difference could any security price movement in any direction make to the portfolio, overall?

The Monday Morning program manages this issue in an evidence-based, effective manner.