Pinning down the origin of the saying, “don’t put all your eggs in one basket” is surprisingly difficult. Some say it’s an ancient Chinese proverb. Some attribute it to American author Mark Twain, or Spanish writer Miguel de Cervantes. It’s a simple saying, one you might expect to find cross-stitched onto a pillow, but don’t let its ubiquity fool you: there’s wisdom in those words.
The late Sir John Templeton was certainly a champion of diversifying one’s “basket” of investments. And so is Tucker Scott, portfolio manager for Templeton Global Equity Group. Diversification is at the core of his investment strategy. A summary of his recent remarks:
- We try to find stocks that we believe are undervalued, then build a portfolio that’s well-diversified by industry and by country
- We try to limit position sizes in an attempt to help limit potential stock-specific risk
- We don’t look to an index as a guide to desired weightings; we rely primarily on internal research
- The primary area where we’ve been purchasing stocks in Europe is the financial sector
- The core European countries appear to be in a healthy state; we think the European “project” should continue Read more…
Jerry Palmieri, Vice President and Sr. Portfolio Manager for Franklin Equity Group, doesn’t worry too much about whether the Greek drama dominating daily headlines will turn into global market tragedy. A veteran of Franklin Templeton since 1965, he’s survived to tell the tale after more than four decades of market ups and downs. His wizened view summarized:
- Market ups and downs are to be expected.
- U.S. market, economy will survive the Greek debt crisis. ”Things will work out.”
- Market timing not the ticket to long-term investing success.
Ups and Downs Are To Be Expected
On “Black Monday,” October 19, 1987, the Dow Jones Industrial Average plunged more than 508 points, or roughly 22%.1 Following the market plunge, Palmieri, a longtime fund manager, earned the respect of his peers for his calm demeanor and diligence during a time few market veterans could ever forget. During one of the worst crashes in the history of the market, Palmieri maintained his resolve that despite the crash, the equity market was still the place for investors to be over the long-term.