Thursday, April 1, 2010

Let Us Now Praise Famous Baskets

The Biotechnology Basket suffered a 73% loss with GNVC.  Yet, two weeks after inception, the basket is up 3.36% or about 87% on an annual basis:


This is what works in Basket Theory.  Spread the risk and reward across multiple stocks, avoiding letting one mistake bring you down and increase the odds of hitting a huge winner.

The ten stocks in the Income Basket have an average dividend yield of 10.7%.  The same risk/reward concept applies here as well, spreading the risk across multiple names, so any one mistake doesn't bring down the entire portfolio. 

(Apologies to James Agee.)