Barbara Corcoran: Why She’s Against Diversifying and Saving Money
Famed “Shark Tank” investor Barbara Corcoran has some strong advice about investing that flies in the face of traditional thinking.
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Unlike most financial experts, Corcoran believes that diversification is not the best path to building wealth. Perhaps even more controversially, she’s also against the general concept of savings.
Here are Corcoran’s explanations of her non-traditional views, along with a look at whether or not you should take her advice.
What Does Corcoran Say About Diversification?
Diversification is one of the cornerstones of basic investment advice.
The theory is that by combining non-correlated assets — or those that don’t move up or down in price at the same time, like gold and stocks — you can reduce the volatility in your overall portfolio. Also, by having multiple assets, you avoid the risk that you can lose all your money by making one bad bet.
However, Corcoran sees things in an entirely different manner.
As she told CNBC Make It in 2023, “One piece of advice people hear all the time, and I just don’t believe it, is: ‘Diversify, don’t put all your eggs in one basket. I put all my money in the real estate basket, my brokerage firm and everything in there went to buying properties.”
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Is She Alone in Her Thinking?
Other famous investors support Corcoran’s ideas about diversification as well. Billionaires Warren Buffett and Charlie Munger, who were co-chairs of Berkshire Hathaway until Munger’s passing in 2023, famously referred to diversification as “diworsification” and “protection against ignorance.”
Like Corcoran, they believed that if you know what you’re doing, putting most or even all of your money into a single idea is the way to achieve outsized returns.
Why Is She Against Saving?
Corcoran’s “anti-saving” stance isn’t a recommendation to avoid basic building blocks like an emergency fund or contributions to a 401(k) plan. Rather, it’s just an expression of how she prefers to invest — in herself.
“I’m just not a believer in saving money,” the real estate guru told CNBC Make It. “I’ve never saved a dime my whole life. I spent every dollar I ever made and threw it back into the business.”
In other words, Corcoran’s approach towards “saving” is to reinvest her income into her growing business, which most successful companies do as well.
It shouldn’t be taken as an admonition against saving and investing your own way, especially if you don’t have your own business. The point Corcoran makes is that people should use their money to build and grow something rather than just let it sit idly.
What Are the Risks With Corcoran’s Approach?
The main risk with Corcoran’s approach is that you might swing and miss, perhaps in terrible fashion. If you put all your eggs into one basket and don’t fully understand what you’re doing, you might easily lose everything you have. That’s not investing, it’s speculating.
And while some speculations can work out, you’re just as likely to go bust as you are to get lucky and punch a winning ticket. Corcoran herself even admits that she almost went bankrupt “for the fifth time” during the 1990-91 recession, so it’s clear that even with an expert’s touch, non-diversification can be an aggressive strategy.
Taking Corcoran’s “non-saving” advice too literally could also cause problems if you think of it as a suggestion to simply blow all your money on shopping sprees.
While Corcoran fully endorses enjoying life and buying the things you want with money you have, she earned that privilege by first reinvesting every dime she had into her growing business. Her process for growing wealth is not to save by being frugal but to invest so you can earn the money to have anything you want.
Could Her Strategy Work for You?
An important thing to note is that Corcoran believes in her anti-diversification, anti-saving stance because it ended up working out for her in spectacular fashion.
She sold her real estate business for $66 million in 2001 and is now a world-renowned expert in the real estate space and a star investor on “Shark Tank.” But this doesn’t necessarily mean her strategy would work for everyone.
For example, if you run a solid business, know what you are doing and funnel all your time, energy and money into it, you certainly could succeed in the same way. But if you have poor business sense — or if your idea of not diversifying is putting all your money into an obscure cryptocurrency — you could just as likely go bust.
The key is to understand exactly what you’re doing, as Corcoran clearly does. If you have her level of expertise, dedication and business know-how, then focusing on one solid investment — like yourself — could indeed be the right path to building wealth.
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