Fabled Diversification

Aesop’s fable about not putting all your eggs in one basket has been construed as, among other things, a strong recommendation for diversification. This ancient author actually was trying to illustrate how the calamity resulted from carelessness rather than conveyance, but that’s the way things go. The young lady in Aesop’s tale of woe would have been better off heeding Andrew Carnegie’s advice, “The wise man puts all his eggs in one basket and watches the basket.” Nevertheless, here at Atlas we adhere to the principle of reasonable diversification when employing your (and our) wealth.

Diversification to your team here at Atlas consists primarily of domestic and foreign equities and fixed income instruments. We track, and could employ, certain currencies and commodities, but their recent dismal performance has kept us away from them to our benefit. Every dog has his day, they say, but those last two just can’t hunt right now.

Should we remain as diversified as we do, or might we hew more to Mr. Carnegie’s line of reasoning? To answer that we turn to some of the most intelligent investors in today’s financial world. The major global banks hire the brightest and the best, so how do they invest? Just read the latest headlines. These folks have manipulated the mortgage market. They have manipulated interest rates. They have manipulated currencies. They have manipulated precious metal prices. They have manipulated prices at utilities, and the list goes on. What stronger argument for diversification could one find? (by J R)