I’ve been preaching the value of diversity for quite some time in my specialized field of energy. When it comes to developing a portfolio of energy resources to supply a region, country, state or city, it is never a good idea to put all of your eggs in one basket.
For example, natural gas prices today in the United States are low. One might be tempted to shift one’s supply to natural gas in a major way – and many utilities are doing just that. It is also a resource that is cleaner than coal, and is a more flexible resource. This latter point is an important consideration as we add more variable solar and wind to the energy equation, since natural gas power plants can help fill in the gaps when the shine doesn’t shine or the wind doesn’t blow.
But California ratepayers such as I will see higher bills in 2017 since gas prices have gone up on the West Coast. The best policy in order to hedge one’s bets is to always diversify, albeit intelligently, with a mix of resources so that over the long-term one is not overexposed to risk, but can also take advantage of the see-saw nature of energy markets.
Energy is just one example, but in a business world now driven by new data streams, creative trading strategies on equities and corresponding complexity in understanding future market opportunities, diversity can take on new meanings.Read More