The Eggs and the Basket Theory

The "Eggs and the Basket" theory advises diversification in investments. Imagine your resources as eggs—if you put all your eggs in one basket and that basket drops or breaks, you lose everything. By spreading eggs across multiple baskets, the risk of losing everything diminishes because even if one basket is lost, others remain safe. In financial terms, investing in a variety of assets reduces the impact of poor performance of any single investment, helping to manage risk and increase the chance of long-term stability and growth.