For years you have been told “Don’t put all your eggs in one basket,” haven’t you? However, my experience is that few people do more than one or two things exceedingly well. The jack-of-all-trades and master of none is seldom a dramatic success in any field.
The best example of diversification in the corporate world is the conglomerate. Most are not real winners. They are too big, too inefficient, too spread out, and are involved in so many businesses they have trouble concentrating and creating profitable growth. '
Would you like to go to a dentist who spent part of his time doing engineering on the side, wrote music, did a little cabinet making, and worked as an auto mechanic, plumber, and accountant on the weekends?
The more you diversify, the less you know about any one area. Many investors overdiversify. The best results are achieved through concentration: putting all your eggs in just a few baskets that you know a great deal about and continuing to watch those baskets very carefully. The more stocks you own, the slower you may be to react and take selling action to raise sufficient cash when the next serious bear market begins.
You're the man if you can say where these words are from. If you can, comment and brag about it!
The purpose of this book - written under the com peting pressure of daily professional work on invest- ment problems - is to help the layman to defend himself, and his own judgment, against this verbal assault and battery of the calamity howlers in one year and of the fatuous optimists in another. The layman should be able to determine the truth for himself.
It is my experience that a daily newspaper and a little simple arithmetic are all he needs for this purpose. He can then forget the terrifying ghosts paraded before him by politicians, financial gossipers, university theorists, and far too many well-intentioned bankers.
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