The saying goes that you do not put all your eggs in one basket. However, if I tell you that you have to put all your eggs in one basket, would you believe me? . To convince you, I would repeat the phrase of a wealthy American billionaire Andrew Carnegie who said, "put all your eggs in one basket and pay attention to this basket." So I'm going to do an article on the myth of diversification and prove to you that you have to put all your eggs in one basket. And especially watch your investments like water on fire.
WHY BE FOCUS (NO DIVERSIFICATION)?
Focusing on one thing allows you to exploit incredible results. Once you master your job, it is possible to explore other opportunities. But try to become an expert at the same time blogging, dropshipping, the stock market, etc. It's not possible.
Millionaire entrepreneurs and investors started with a successful business and then diversified if they wanted. They only start investing once they master their own company first, which they can afford to delegate. In the beginning often you are alone, so you have to concentrate not to lose your mind on different trades. Even if the opportunities are interesting, you have to learn to say no.
Focusing on your goal of success will allow you to become an authority in your field. You will sometimes know before others how your sector evolves because you are alert.
To illustrate my point I give you a quote from a billionaire investment:
"Diversification is a protection against ignorance. Warren Buffett
Hence the importance of continuing education throughout his career as an entrepreneur and investor.
THE MYTH OF DIVERSIFICATION
" Put all one's eggs in one basket. This formula was invented for the rich and the financial. When you are above the millions of wealth (without the debts), at that moment, it is necessary to diversify to reduce the risks. But for a "start-up entrepreneur or entrepreneur" (someone starting from scratch), this is not wise. Because it is the fear of failure that drives diversification.
If you enter a market with the knowledge of everything about the sector, there is no big risk. Especially if you invest in long-term growth markets such as ecommerce or real estate. These areas are not likely to disappear in 10 or 15 years. There can be ups and downs but these are sectors that still work in the medium and long term.
Diversification is for traders. This is a phrase taken up by financial brokers who often do not know all the sectors they invest in. They are looking for the great "hot" opportunity of the moment. And so to reduce the huge risks they take, they do not put all their eggs in one basket. It should be remembered that they do not invest with their money except of course for independent traders.
In affiliation, more precisely in media buying (media buying) we have a similar approach. When I try new advertising campaigns, I create several ads to see the one that "died" and then stop those that do not work and invest everything on the one with the most ROI. And often it works but it comes back to the same thing, if you do not have a budget to invest, you can not afford to lose money diversifying.
In media buying we know that in the beginning we will lose money on the 3/4 campaigns but in the end with the experience, we know how to manage this risk thanks to the data (data) and full of other techniques we manage to make profitable the campaigns of pubs.
HOW TO DECREASE RISKS?
The richest people are not diversified. Xavier Niel, and Bernard Arnault, these two famous entrepreneurs have not in common that their status as a billionaire, because they also have in common the fact of not being diversified. Of course, they have several companies and affiliates that are in the same fields or very close. All gathered in a holding company that holds their extreme wealth by holding shares.
It is true that they own the stock of companies they founded and continue to exploit, but they perfectly illustrate the power of concentration. The fastest way to access wealth is to have concentrated positions. When the market changes, you earn more money when you hold multiple stocks in one or more positions in the same industry because there is more leverage with concentration.
The flaw of this strategy is that when the market goes down, you lose just as much. However, there are strategies to mitigate these losses as I said above, investing for the long term and continuing to master its market by becoming an expert.
So investing in the long term are easy situations to avoid and control.
The point here is that nobody will come rich like Niel or Arnault, investing 100 euros, 200 euros, or even 5,000 euros a month in several different investments. There is not enough concentration in this strategy. The key is concentration.
CONCLUSION
Even though this myth is well known and highly respected by most people, it is not dedicated to the entire population. So you need to avoid diversifying to focus on one area. The main goal of this focus is to become an expert to know your niche, your market and make the decisions knowing what you are doing. This allows you to even consider the results, the returns on investments.
Will you continue to put all your eggs in one basket or focus on your trade? Give me your opinion on the subject.
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