We've all heard the "buzz" words, "diversification", "spread your risks!".
These are the mantra of financial planners, financial consultants, securities sales persons, et al. Nonsense!
It might be necessary after you've achieved your wealth goals and your capital has reached an unwieldy amount, or in a situation where no intelligent supervision is likely to be present. Otherwise, it is an admission of not knowing what to do and an effort to strike an average.
No one ever says, "My goal is to be average." If all you want is "average" results, buy a mutual fund.
If your goal is to accumulate great wealth, that is, "money that counts", the intelligent and safe way to handle capital is to concentrate.
If you don't know what to do, if things are not clear, do nothing.
Always start with a large cash reserve. When an attractive situation appears, act.
Always be prepared to go "all in". If something is not worth going all in, it is not worth going at all; but do it in stages.
Start with a small initial position, at first. If it does not work out the way you expect, close it out and get back to cash. But if it does what is expected of it, expand your position on a scale up.
The greatest safety lies in putting all your eggs in one basket and insuringthe basket. By doing so, you will trade with much more deliberation bringing all your faculties to bear. You will also avoid the false sense of security that diversification encourages.
No thinking person will buy more of something than the market will take when he wants to sell. This practical test will force one into broad-based, liquid, market leaders where one belongs.
Concentration, not the siren song of diversification,is what creates great wealth.
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Two Paths to Financial Independence
1. Own your own successful business.
2. Own a piece of someone else's successful business.
... Billionaire J. Paul Getty, founder of Getty Oil.
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“I’d rather have 1 percent of 100 people’s efforts, than 100% of my own.” ... J. Paul Getty, founder of Getty Oil.