Note: This is post #95 in a weekly video series on basic economics.

Before it went bankrupt in 2001, many of Enron’s employees had most or all of their retirement funds pany stock. When pany collapsed, as Alex Tabarrok notes, employees who were once multimillionaires ended up with almost nothing. They failed to heed the most basic rule of investing:Don’t put all your eggs in one basket.

In this video by Marginal Revolution University, Tabarrok explains why diversification is essential for responsible investing.

(If you find the pace of the videos too slow, I’d mend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Clickhereto see other videos in the Introduction to Economics series.