History
Diversification is mentioned in the Bible, in the book of Ecclesiastes which was written in approximately 935 B.C.:
- But divide your investments among many places,
- for you do not know what risks might lie ahead.
Diversification is also mentioned in the Talmud. The formula given there is to split one's assets into thirds: one third in business (buying and selling things), one third kept liquid (e.g. gold coins), and one third in land (real estate).
Diversification is mentioned in Shakespeare (Merchant of Venice):
- My ventures are not in one bottom trusted,
- Nor to one place; nor is my whole estate
- Upon the fortune of this present year:
- Therefore, my merchandise makes me not sad.
The modern understanding of diversification dates back to the work of Harry Markowitz in the 1950s.
Read more about this topic: Diversification (finance)
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