Would you put all your eggs in one basket?

[burglar]

Guess what I bought today?
A wicker basket to put all my eggs into!


wicker.jpg

Not this particular one but one just like it!

[cynic]

Nice basket!

P.S. If it was anyone other than yourself posting, I'd be tempted to include a snide reference to "basket cases", but I know that doesn't apply in your case even though we happen to be discussing baskets!

[Tysonboss1]

If this is a serious question, My answer would be no.

But I guess it depends how many eggs you have, and how much you rely on those eggs.

If you only have one egg, you don't really have a choice.

[ROE]

All my eggs are in stock for the last 12 years :-) and will be for the next 50 years

Just make sure the eggs you put in those basket are harden eggs cant be broken

[burglar]

Nice basket!

P.S. If it was anyone other than yourself posting, I'd be tempted to include a snide reference to "basket cases", but I know that doesn't apply in your case even though we happen to be discussing baskets!

Hi cynic,

Like you, I am at a loss on weekends.
I literally went out and bought a basket like this.
Then I had to do an appraisal to see if I got value.
There is a lot of wicker about, and some of it was cheap.

But I can keep it if needs be.
Next to the "rug beater" I bought on a previous outing!

rug beater.jpg

[burglar]

If this is a serious question, My answer would be no.

But I guess it depends how many eggs you have, and how much you rely on those eggs.

If you only have one egg, you don't really have a choice.

Hi TB1,

I only have one basket.
And now I watch it very closely.

[Calliope]

I only have one basket.
And now I watch it very closely.

Ahh. As Mark Twain said;

"Put all your eggs in one basket -- and watch that basket!"

[Uncle Festivus]

Australia has - it's called China - the basket is probably made in China too?

[springhill]

In hindsight, I can think of 15-20 stocks I would put all my eggs into.
Thinking ahead, I can only think of one and that is still a moderately risky proposition.

[Julia]

The question is not clear as to whether the OP is referring to having a number of stocks as opposed to one, or holding at any one time, just one asset class.

[burglar]

The OP was ruminating on diversification!

Is it good or does it spread your cash, your focus or other resources too thinly.
Does it really reduce risk?
Or does it reduce reward?

.

[ROE]

I love for someone to show me evidence that diversification outperform
well picked 1 asset class

I cant find evidence any where......

example: diversification vs
a portfolio of well picked 15-20 stocks say CBA WOW CAB ARP DMP NVT RFG etc...
I have a few of these....

example: diversification vs
2 Residential investment properties
1 Commercial property
WDC shares for properties trust..

In my opinion you dont need diversification, you need to know
what to buy and at what price to buy and you are way ahead...

and when you dont know what to buy and at what price, money stay in Cash...

[Julia]

The OP was ruminating on diversification!

Is it good or does it spread your cash, your focus or other resources too thinly.
Does it really reduce risk?
Or does it reduce reward?

.

You're missing the point of my asking for clarification.
It's not clear whether you are 'ruminating' on diversifying across a variety of companies, but with all your investment in equities, or whether alternatively you're 'ruminating' on diversifying across asset classes,
e.g. cash, fixed interest, property, shares, precious metals, fine arts, antiques, whatever.

Does that make it clearer for you?

ROE: Agree.

[burglar]

I love for someone to show me evidence that diversification outperform
well picked 1 asset class ...

Hi ROE,

I agree wholeheartedly with your posts.
It works well for you.

I dive into and out of companies.
I have some favourites.

Some I have bought, sold and bought again.
It reduces homework.
But has some problems you don't experience.
Correct exiting is one that comes to mind.

[burglar]

You're missing the point ...

... deliberately missing the point?!

I don't wish to lecture anyone on the benefits
or otherwise of diversification!


Before I leave the topic I would like to mention this:
There was a time when half of my portfolio was related to the "Price of Gold"
The bottom line seesawed for months till I had it figured out!

[Tysonboss1]

Hi TB1,

I only have one basket.
And now I watch it very closely.

do you mean a single stock. I don't think thats a good idea, It doesn't matter how well you watch it there is always the chance that an event that is completely un foreseen can have a massive effect on any one investment,

Natural disasters, major accounting fraud, the list goes on.

I would suggest maybe a minimum of say 6 stocks.

[Tysonboss1]

I love for someone to show me evidence that diversification outperform
well picked 1 asset class

I cant find evidence any where......

example: diversification vs
a portfolio of well picked 15-20 stocks say CBA WOW CAB ARP DMP NVT RFG etc...
I have a few of these....

example: diversification vs
2 Residential investment properties
1 Commercial property
WDC shares for properties trust..

In my opinion you dont need diversification, you need to know
what to buy and at what price to buy and you are way ahead...

and when you dont know what to buy and at what price, money stay in Cash...

I wouldn't class a portfolio of 15-20 stocks as having all your eggs in one basket.

a Portfolio of 15-20 stocks is likely to be extremly diversified in terms of asset classes, industry, geography and riskprofile.

I think the term " all eggs in one basket" refers to holding a single stock.

I think you may aggree with me that any single stock is probably to risky buy itself, except for maybe the giant conglomerates which are diversified within themselves, eg berkshire hathaway

But even warren buffet tell people he is only 99% Berkshire.

[Klogg]

... deliberately missing the point?!

I don't wish to lecture anyone on the benefits
or otherwise of diversification!


Before I leave the topic I would like to mention this:
There was a time when half of my portfolio was related to the "Price of Gold"
The bottom line seesawed for months till I had it figured out!

Hah, I can relate - at the moment, 45% of my portfolio is on one stock... and I'm up 25% on it within 7months.

I'm also in the same camp as ROE - if you make your investment decisions extremely carefully, then there's no reason why you need diversification.

[Tysonboss1]

... deliberately missing the point?!

I think clarifying that point would make the discussion better

Before I leave the topic I would like to mention this:
There was a time when half of my portfolio was related to the "Price of Gold"
The bottom line seesawed for months till I had it figured out

I think it seesawed for months before luck went your way for a while, which left you thinking you had worked in out

[Tysonboss1]

if you make your investment decisions extremely carefully, then there's no reason why you need diversification.

Even the greatest investors make mistakes, if you have all you assets in a single stock, it can turn what would have been a speeding ticket into serious car crash that can take years to recover from or worst case wipe you out.

Warren buffet has made mistakes that if it were not for diversification would have cut his steller investment record in half, and some would have wiped him out if it weren't for some good fortune and good name.

Benjamin Graham goes as far as saying a single stock holding can not be classed as an investment, but rather a a gamble.