Madoff lesson: diversification

If there are any easy lessons from the Bernie Madoff scandal, it is one of the three basic lessons of Investing 101: diversification, diversification, and diversification. Here in the 21st Century, there is simply no good excuse for putting all of your eggs in one basket. Sure, maybe there might be some times when it is tempting, but the guideline has to be that if you do not diversify, you essentially have nobody else to blame if that one basket blows up. Sure, maybe you sincerely believe that this one basket will not blow up and maybe everybody says that it can't blow up, but a key lesson from history is that without exception every basket has the potential to blow up.

-- Jack Krupansky