the.com/diversification
The only free lunch in finance — and still most people leave hungry.
means The strategy of spreading investments or activities across different assets or areas so that a loss in one doesn't sink the whole ship.
from Traces back to Latin 'diversificare' — 'diversus' (turned different ways, from 'divertere,' to turn aside) plus 'facere' (to make). So the root sense is literally 'to make varied' or 'to turn into different directions.' The financial meaning — don't put all your eggs in one basket, formalized into portfolio theory — is a 20th-century application of a much older word for simply mixing things up.
- origin
- Formalized by Harry Markowitz in 1952
- nobel payoff
- Earned him the 1990 Economics Prize
- the catch
- Reduces risk, never guarantees returns
- the irony
- Feels like owning nothing special at all