I always have this dilemma, whether having options is the right thing or deciding on one path and dedicating all your energy and finances
There’s one theory attributed to Tariq ibn Zaiyad, who is said to have invaded the Iberian peninsula and ordered all the boats be burned after his troops landed.
The idea being if people don’t have an option left then they will concentrate all their energy in trying to figure out how to succeed within the constraints. In case people have an option they don’t put all their energy in solving the problems because they know they can go back to the other option.
The other way of l looking at it is that if we have too many options then we also end up being undecided and take no action.
A lot of investment gurus suggest that you should only focus on 10-15 stocks in your portfolio after you have identified the best stocks as per your risk profile. The idea is that it’s not possible to monitor more than 10-15 stocks. And the percentage of holding within these should be based on your conviction of growth so that you can get maximum returns. After that you should only focus on these for the long term and monitor them.
On the other hand you have people who say you should always have a safety net so that in case of a problem you know you can fall back
In the finance industry this is the concept behind ETFs and most MFs. so the returns are always averaged out to the market and there is a lower chance off loosing money. As Warren Buffet says the first rule of investing is Never lose Money and the second rule is never forget rule number one.
In my own operations I always have this argument with my peers when we are making the budget if we should only focus on one new initiative in a year and make it successful or should we have 2-3 simultaneously and see which moves. My opinion is that it’s very tough trying to ride multiple boats in parallel
Somewhere I think it may also have to do with bandwidth.
What’s your view. Would you rather go beyond the point of no return, choose only one option and make yourself a success or would you rather place bets on multiple things. I would love to heard your comments.
Till next time.