The Importance of Diversification

Diversification is crucial for maintaining a balanced and resilient investment portfolio. Graham emphasizes that owning a variety of assets can protect investors from significant losses. He likens this to an all-soprano chorus attempting to sing 'Old Man River' without baritones to hit the low notes. True diversification involves holding assets that do not all rise and fall together, thereby achieving 'investing harmony.' This principle helps mitigate the impact of any single investment's poor performance on the overall portfolio.