Diversification
Etymology
From Latin "diversus" (turned different ways), past participle of "divertere" — dis "apart" + vertere "to turn". To diversify is to turn your money in many directions at once, so that no single event can carry all of it away. The root idea is deliberate scattering.
noun · /dih-vur-sih-fih-KAY-shun/
Spreading money across many different investments so that a loss in one is cushioned by others.
What it names
The formal name for “don’t put all your eggs in one basket” — the main way ordinary investors reduce risk without predicting the future.
Example
Diversification meant that when tech stocks slid, his gains in bonds and overseas funds softened the blow.
Related idea
Distinguish hedging: diversification lowers risk by owning many uncorrelated things, while a hedge is a specific offsetting bet placed to cancel out a particular risk you are worried about.