News reports emerged this week from southwestern Spain, where it seems a fire in a cinema killed several hundred people. The building had only one door, and the moviegoers could not all fit through it in time to get out. This proves, authorities said, that you should not have all your Basques in one exit.That chestnut leads to this week's topic, which is investment mix, a.k.a. asset allocation, a.k.a. not having all your eggs in one basket, in case anyone missed the allusion. More specifically, I shall answer a question asked of me a couple of times in the past few weeks: what percentage of your assets should be held in bonds or stocks or other things? I shall attempt to make the question interesting to those without assets as well as those with, while at the same time drinking a glass of water.

If you own something, you carry the risk of losing it, or having it damaged or stolen. It could be burned down, or left on a bus. It could break. It could crash into a wall at 90 miles an hour. Any number of other risks exist, too.

Having all your eggs in one basket is known in financial circles as concentration risk. People who worked at Enron and had all their savings invested in the company's shares lost their jobs, their investments and their pensions simultaneously when the bubble burst. Their concentration risk was way too great.

Spreading risk is what insurance companies do, and it's what investors should do too.

The basic building blocks of individual investment portfolios can be described in five broad categories: real estate, cash, bonds, stocks and what might be called everything else. Having some of your total in each category is the classic way of reducing concentration risk. Under this mixed portfolio concept, which is basic to investing, if the economy goes in a particular direction, up or down, at least some of your portfolio will prosper, since the value of assets in these categories does not move in the same direction at the same time, generally speaking.

House prices, at least in Bermuda, tend to move upward and occasionally pause for breath. The value of stocks and bonds can be more volatile. Economic conditions that encourage stock values to rise, such as we have experienced in the past few years, tend to include relatively low interest rates, such as we have experienced for what seems like a long time now.

Under low interest rate conditions, bonds tend to do less well, since their value is greatly affected by current interest rates. The same is true in reverse: when bonds boom, stocks tend to mark time, or fall. By having both, some of your portfolio is always in the ascendant. Of course, this is over an investment timeframe, which is generally considered to be not less than five years.

The law of averages is at work here, a law that requires time to prove itself. On any given day, or during any given month, it will not necessarily work. There are days on which the value of stocks and bonds fall simultaneously. In the long run, both will increase in value, but not at the same time. It's a little like tossing a coin: you could do it 12 times, and have heads come up every time, But if you toss a million coins, you'll tend to end up with something very close to 50:50.

The generally accepted rule is that as you near retirement, you should increase the percentage of your assets held in bonds and decrease the percentage held in stocks. I have heard it said that the percentage of your assets you hold in bonds should match your age, which sounds fair.

What matters more than rules is that you be comfortable, so selecting the mix of your assets will always be a personal matter. Having a mix, however, is an inflexibly good thing. And that's life, isn't it? Some hard and fast rules, and some areas open to interpretation. The secret lies in knowing which is which.

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For some time, I have been thinking of having a separate column at the foot of this column. Its purpose would be to name and shame the most selfish drivers in Bermuda.

Last week, a thoroughly self-centered clod, seeing me waiting for one of two parking spaces, nipped in ahead of me and took both of them. He then cavalierly got out of the car and ignored me when I tried to speak to him. My plan was to give you his licence number so that society would treat him with disdain, but a flaw has been pointed out to me in having such an adjunct column: the newspaper would have to add an extra 48 pages every Saturday to accommodate it.

Roger Crombie is a Fellow of the Institute of Chartered Accountants in England Wales, a Member of the British Management Institute and a Fellow of the Institute of Financial Accountants. His e-mail address is crombie@northrock.bm.