Quotation Of The Week – Diversification is it YOUR Profit Killer ?



First a quick reminder of what the Quotation Of The Week’  award is all about:

The idea is simple: Every time I find a quotation that I think will add real value for my blogs readers, I will bookmark it and put it on my list to be the: Quotation of the Week.

I will then write a post similar to this one explaining why I have decided on that particular weeks Quotation.

I will also link to it from my Quotation of the week icon situated near the top of my side bar
My Quotation of the week award will be posted every Friday.

For a full list of previous winners visit my ‘Quotation Of The WeekPage.


This week’s winner of my ‘Quotation of the week award is actually two quotes by the Great Investor Warren Buffett on the subject of Diversification:


"Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing."


“Diversification may preserve wealth, but concentration builds wealth.”

Warren Buffett.


As sports speculators the possibilities for entering and potentially profiting from, or losing money in, the sports markets are endless.

Within a single event, in a single sport there can be over one hundred markets to choose from, if you times that by the number of events and then the number of sports there are an infinite ways to play.

There are literally hundreds of systems, methods or tipsters that you could follow for each sport, again times that by the number of sports and the possibilities are endless.

So what is the answer to coping with this vast array of choice? I always believed that part of the answer was to diversify and use a large number of methods or follow a range of tipsters so as to limit risk, but the more that I learn the more I am inclined to believe that the opposite of diversification is the most profitable direction to head.

By that I am not saying do not examine as many facets of the markets as we can. What I am saying is that I believe our priority should be to find just one profitable market/ method and concentrate on extracting the maximum value from that edge.

Only when we have mastered that particular market/method should we start to focus our efforts on another potentially profitable market/method.

I firmly believe that doing the above should result in finding a very concentrated but highly profitable portfolio of approaches that should last the test of time.


I hope you have enjoyed this post
Stay patient
Mark

6 comments:

  1. Avid reader of your Blog Mark, i have just kicked one off, would appreciate a link exchange

    http://layawayforaprofitableday.blogspot.com/

    Regards
    Neil

    ReplyDelete
  2. Hi Neil

    I've added a link to your blog.

    Great to see you dipping your toe in the blogging waters. I'm looking forward to reading and hopefully profiting from the advice.

    Good Luck
    Mark

    ReplyDelete
  3. Hi Mark,

    Good to see you back on the blogging road and as always some thought provoking stuff already. Funnily enough I had similar thoughts a couple of weeks ago when I started to paper test a series of strategies/systems mad ideas etc to see if by having a series would the profits on one or some cover the loss on the rest on a daily basis. Early days and obviously the more days you run the better the averages work out. Ideally 12 months would be great but does one have the patience, particularly if you start to see early results from one or more of the methods.

    I do think that your decision to concentrate on one method is sensible and my early results have also highlighted this but also the benefits of stopping at a winner on each strategy each day. Two schools of thought re S.A.W I know......any thoughts yourself?

    Looking forward to your future postings,
    kind regards,
    Lee

    ReplyDelete
  4. Hi Lee

    Thanks for the comment.

    Good to see that you are still working away on your strategies / systems and mad ideas ( Aren't all the best ideas mad ones? LOL)

    My main reasons for concentrating on the one approach are numerous and I will be explaining more in future posts, but the main reason is that I am, and I believe a lot of others are, limited in the two main resources that a sports speculator needs, which are MONEY and TIME.

    Because of the above I have spent a long time working on an approach (I like to use the word approach as there are more than one method involved in my approach) that I have tailored to what I believe are my own strengths and weaknesses.

    With regards to S.A.W (google ‘stop at a winner’ for those readers who have never heard of it), it is a method that does not fit in with my strengths. by that I mean that I like to have an approach that fits the profile of: Win a little often, Lose a Little often but Win Big on occasion.

    With The S.A.W method the profile is: Win a little often, Lose Big on rare occasions. I find it hard to handle those big losses. I am not saying S.A.W does not work, as I believe that if you are extremely disciplined in your approach and set rigid stop losses then as long as you have the obligatory edge you should make money.

    Anyway I hope that answers your question and as I wrote I will be expanding more on my approach over time.

    Good luck with your trials and please keep me posted on how your they get on.

    Mark

    ReplyDelete
  5. Hi Mark, interesting blog. I would appreciate a link exchange if you can please, thanks. Josh

    http://bet19.blogspot.com/

    ReplyDelete
  6. Hi Josh

    I have added a link.

    Regards
    Mark

    ReplyDelete

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