What investment strategy emphasizes not putting all your resources in one area?

The correct answer, diversification, refers to the investment strategy of spreading your investments across a variety of assets or asset classes in order to reduce risk. By not putting all your resources into a single investment or type of investment, you are less vulnerable to adverse outcomes that might affect one specific area of your portfolio. This strategy allows for potential positive performance from different sectors or investments to offset losses that might occur in others. As a result, diversification aims to achieve a more stable and consistent return over time, which is a fundamental principle in managing financial risk.

In contrast, concentration involves focusing on a smaller number of investments, which can increase risk due to having more exposure to the performance of those specific assets. Speculation is characterized by high-risk investments in the hope of achieving significant returns, often not accounting for potential losses. Allocation generally refers to the way assets are distributed in a portfolio but does not inherently emphasize the principle of spreading out investments to minimize risk as diversification does.