"Money is like manure. You have to spread it around or it smells." -- J. Paul Getty
Having "all your eggs in one basket" is a formula for certain ruin! Mathematicians often use coin tossing to illustrate gambler's ruin. For example, you start with a quarter. On the first spin you lose; you're out of the game, ruin. If you start with ten quarters, spin a quarter at a time, and every time it's heads you gain a quarter while every time it's tails you lose a quarter, it'll take much longer to lose all your money. In fact, given the 50/50 odds, you may be able to play for many years without losing all your money.
In order to have a high probability of winning in the long run, you must make "bets" where you have an overall statistical advantage. I put over $4,500 into WHP because my analysis of the program indicated a high probability that I would be able to not only recover my capital fairly quickly, but also take at least $5,000 a month out of the game subsequently. But my analysis could have been mistaken and I could have lost my $4,500. However, because $4,500 is a fraction of my bankroll, losing it would only have been a minor setback.
In the case of SG, I put in $6,000 and took out $100.000 during about a year. Suppose there are ten programs, each with the potential to return 10 times your capital in one year, and you risk $5,000 on each for a total of $50,000. Suppose that in 80% of the programs you lose all your money -- $40,000 down the drain! Suppose that the two winners give you back $50,000 each (achieving the 10-times potential) -- a total of $100,000 -- overall, you've doubled your money!
Suppose that in half the programs you lose all your money -- $25,000 down the drain! Suppose that among the five winners, two give you back $50,000 each (achieving the 10-times potential) and three give you back $25,000 each (achieving half of the 10-times potential) -- a total of $175,000 -- overall, you've more than tripled your money!
(There are also some programs, where because of referral fees, you can take out vastly more than you put in. A case in point is PILL -- Terra Libra put in $200 about five years ago, and has taken out over $100,000! Terra Libra did spend money on promotion. Fortunately, over the Internet you can market without spending money! -- see Money Skill #40.)
Because, despite anyone's best analysis, the future is never completely predictable and any program can fail for any number of reasons, it's absolutely vital to diversify!
