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Sunday, April 24, 2011

Number 1 Principle Of Successful Investing

DON'T PUT ALL YOUR EGGS IN ONE BASKET! Although a bit late for former Enron employees, hopefully this helps a gold bug or two :)


  1. Very, very creative post Robert! Happy Easter!

  2. @MoneyCone Thanks. For those with small children (or even teenagers) this is a teaching moment. Just ask them what happens if they hit a rough bump and their basket tips over. The phrase must have originated hundreds of years ago as peasants took their produce to market. Sometimes the oldest wisdom is the best.
    For those clever enough like Markowitz they can put in some mathematics and win a Nobel Prize:)

  3. I've worked with a bunch of MCI/Worldcom people who saw their 401K millions go to 0 because they had every penny invested in company stock.

    Not everyone can be a Warren Buffet, and for Joe Six-pack this is the best strategy.

  4. @ The Grouch Many years ago I made a significant bet on Maryland National stock because I worked there. It worked out nicely. National Bank of Washington on the other hand, at the same time, went under. It was the luck of the draw. Putting all your eggs in one basket is a huge gamble whether its GE, Coca Cola or Merrill Lynch IMHO.

  5. Happy Easter Rob!

    This principle is what keeps me from buying more of a stock even if I know it's fundamentally solid. It's what I don't know that scares me :)

  6. Thanks Mich! I try to keep individual stocks and even some ETFs at less that 5% of total assets.