Ep. 2017: The Eggs-in-One-Basket Conundrum

Three famous companies in three different industries can still add up to a total loss. Don and Tom revisit Rule 17 from Financial Physics: diversification means much more than owning a handful of familiar stocks. From Enron and WorldCom to hometown favorites, they explain why confidence in a company is no substitute for spreading your investment risk.They also distinguish investments from the firms that hold them, then tackle listener questions about micro-cap funds, building an emergency reserve before retirement, and converting eligible Vanguard mutual funds to ETFs. The common thread: keep the portfolio understandable, watch the risks you’re actually taking, and know which taxes a conversion postpones rather than erases.00:42 Rule 17 and the eggs-in-one-basket problem02:39 When individual stocks go to zero07:46 Diversifying across asset classes08:53 Investing beyond the U.S.10:34 Funds, custodians, and investor protections15:49 Should you add micro-cap funds?18:56 Emergency savings before retirement23:02 Converting Vanguard mutual funds to ETFs

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