SINGAPORE: Diversification is generally considered one of the basic tenets of investing and financial planning. Owning a mix of assets, ideally with a low correlation, including, stocks, bonds, real estate and gold, for example, is Investing 101. That is unless you’re one of the world’s most famous investors, Jim Rogers. Jim doesn’t buy into the cult of asset allocation.
“I know that people are taught to diversify. But diversification is just that’s something that brokers came up with, so they don’t get sued,” Jim said. “If you want to get rich… You have to concentrate and focus,” he says. “The expression on Wall Street is, don’t put all of your eggs in one basket. Ha! You should put all of your eggs in one basket. But be sure you’ve got the right basket and make sure you watch the basket very, very carefully.”
This obviously goes against conventional thinking. But this kind of thinking is what made Jim one of the world’s most successful investors. He co-founded the Quantum Fund which saw returns of 4200% in 10 years. Now, of course, this strategy of putting all your eggs in one basket… but making sure it’s the right basket, is not for everyone. It’s a high risk, high reward strategy . And Jim acknowledges that.