Italian economist Vilfredo Pareto was the first person to observe that 20% of the population in Italy owned 80% of the land. After more research, Pareto found out that this distribution applies to a wide range of things.
The Pareto principle shows that 80% of your results come from 20% of your efforts. Or 20% of your customers contribute 80% of your profits. 20% of your activities account for 80% of your happiness.
The Pareto principle is part of the management curricula at leading business schools but has anybody integrated it into their investment models?
If you have a peek at your portfolio, the chances are that 20% of your investments account for 80% of your profits. So, focus and increase the size of your bets on the 20% of your best investments! This can make an enormous difference in your investment success.
Apply the Pareto principle to your live and investments. You will become a happier and richer person!
Sven Franssen