For a while there was this bit of unconventional investment wisdom out there that defied conservative diversification of one's assets. It was a slight modification of an old hackneyed expression. "It is OK to put all of your eggs in one basket, as long as you watch that basket very closely."
Well, that is as imprudent as the conventional diversification strategy it aims to counter.
Investing is an art, not a science, especially when you are dealing with an imbalanced table that is referred to as "the Street."
The herd instinct prevails in investing; bonuses are paid on how well one does against the averages and the averages are determined by the big money that follows that herd instinct.
Take a look at an investment theory/methodology offered in a book entitled "The Intuitive Investor." It is written by Jason Apollo Voss, who also has a website where he blogs about his theory.
There is no magic formula, no shortcut to wealth, no gurus, no reliable patterns as the technicians claim. You have to watch the charts and listen to the gurus because they do motivate others to act in certain ways and that moves markets. That does not mean you have to believe in them.
I do believe in a few precepts, the biggest one espoused by J.P. Morgan, whose family is buried a few miles from here on the edge of Hartford, CT.
His statement, which really was an observation when he coined it was "I made a fortune being early." I do believe in both being early in and early out. The greedy can take the last ten or twenty percent.....and I want to be in before the herd arrives so I can be watching and not acting when things get frenetic.
I made money in Enron. I sold it when things got ridiculously priced and there was hype everywhere. When I saw them trying to monetize futures in bandwidth, I knew something was inherently wrong. So I sold in the summer of 2000 and I was really angry with myself when I saw the price continue to rise substantially after I sold. But I stuck to my intuition, which like anything else, is learned.
I do not consider myself anywhere near the level of the investing mavens that appear on this and other boards, but I do adhere to my "intuitive experience" of thirty five years, observing the moves in stocks, bonds, commodities and currencies.
You should study your own "self" the most, how you react to situations, gains, losses, mistakes, surprises, etc.. Listen to others, even the elitists that seem to think they know everything, but RELY on yourself only.