Wealth Is Preserved Through Diversification --

but wealth is created through concentration.

Do you really want wealth?

That is not a rhetorical question. You, not society, should decide where success exists for you.

Wealth is sometimes earned by accident but is seldom retained if that is its source. Dot Com millionaires disappeared and now housing flippers have had a day in the sun - most will soon be back where they were.

(my guess is gold still has a huge bull market ahead of it - this is my guess, not a recommendation. I will not be financially destroyed if I am wrong)

You alone must decide if success is worth the risk. Real success carries with it a substantial danger of failure. If you are willing to dedicate yourself - to focus yourself - you can overcome many of the dangers by sheer determination.

And the journey will be exciting.

Michael Dell is a good example, Dell provides a decent product and fair service in a very crowded field with narrow margins. Focused on innovation with his products and their overall systems he has pushed many companies out of the field that just dabbled to see if they could make a buck.

Innovation by the entrepreneur, argued Schumpeter, led to gales of "creative destruction" as innovations caused old inventories, ideas, technologies, skills, and equipment to become obsolete. The question, as Schumpeter saw it, was not "how capitalism administers existing structures,... [but] how it creates and destroys them." This creative destruction, he believed, caused continuous progress and improved standards of living for everyone.

But the key too see here is what Michael Dell apparently also understands -- wealth is made through concentration and preserved through diversification. Dell made regular sales of his Dell company stock during the dot com madness - he potentially diversified his wealth so no single event could undo him.

If you have dabbled in investments, following a tip here, an analyst recommendation there, it is time to concentrate. Find a part of a market that you can appreciate and learn how to play that market. Knowledge of the underlying fungible security is important - far more important is knowledge of the interaction of the players themselves.

With such knowledge you would soon discover that most option models price options for the players on the floor. Once you develop an option model for yourself that follows different constraints regarding time and correlation - you may start to win.

Here is the speculation rule:

There are a million ways to make money in the markets - all of them are hard to find and short lived.

Only those with focus will be able to both profit - and to move on when the time comes.


Once wealth is secured - diversify to protect it.

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