An old English proverb:
‘don’t put all your eggs in one basket’
helps illustrate what diversification is all about in the investment world. The reduction of risk by the spreading of investments and avoiding having too much of your money in one place. Instead of a basket, in this context substitute one share, one sector, one country or one asset class.
This principle of diversification sits at the very core of investment management and a diversification policy successfully implemented is one of the main features that differentiate investment from gambling.
I met a lady some years ago who had a substantial number of shares in one company, Barclays Bank. I spoke to her about the ...