Diversify - why?

Almost everyone says to diversify. I have not put enough thought or study of diversification to know whether it is best for me or not. However, until I do, the easiest path is to follow the wisdom of the masses and diversify.

As a trustee I note the Super Fund is as woefully diversified as can be. One listed company and cash accounts. With 33% of the fund invested it Telstra I feel it necessary to explain this position.
One of the reasons for taking control of our Super was to control diversification across all our long term assets. Under a total assets comparison Telstra makes up under 5% of assets, which is comfortably under our limit of 10%.

Telstra has a complex risk reward scenario, but we hold it to be a good long term buy and dividend paying share for many years to come.

With total fund diversification and assets utilisation in mind the super fund will sell 1 NAB put if NAB is over $36 at options expiration 30 March 2006. Aim will be good price on $36 Put, with $37 Put considered if excellent price over .70 can be gained. As always with Naked Puts the aim is to sell at a price we are happy to buy at, ie getting paid for a limit order.