Balanced Portfolio: Sine Quo Non

Jeff Bezos, Bill Gates, Steve Jobs, Larry Ellison, Dhirubhai Ambani, Michael Dell—all have something in common apart from being first-generation billionaires. Each built his own fortune by focussing only on one business.  So, focus is one way to become insanely rich? However, literally one in a hundred million businesses takes off to that extent. In addition to being highly skilled, an entrepreneur needs to be very, very lucky to have started one of those platinum-plated businesses. Instead of aiming for the Fortune 500 list, if you just want a decent return on investments, it is safer to hold a diversified portfolio.  Most people instinctively understand why diversification works: different industries do well at different times and a well-diversified portfolio contains some winners at all times. The drawback of diversification is—a part of the portfolio will be...