This is an expression that denotes a situation where you put a bunch of valuable stuff in one place. A good example is storing all your data on a 73 gigabyte hard drive. If that drive goes, you lose all your data. It is much better to spread your&data out over several disks, and back up those disks with critical data, than to have one huge disk with all the data.

"Don't put all your eggs in one basket." is an old homily.

Eggs, for those of you completely divorced from the rural milieu that gave rise to to this metaphor, are fragile and easily broken if their container is bumped or falls.

The meaning is straightforward: Don't put yourself in a situation where a single failure has catastrophic consequences. Spread your risk. Have a plan B. Don't pin all yor hopes on one possibility.

This saying is applicable when the risks are outside of your control, For instance when playing the stock market.

It is also applicable when the cost of spreading the risk is low: for instance if your data is irreplacable, make sure it is stored on more than one hard drive, and have an offsite backup in a different location - Raid 5 won't save you if the building burns down.

This lesson was well and truly learned by a company that that in the year 2001, had their primary data center in one tower of the World Trade Center, New York, and the backup site in the other tower.

 

There is a counter-cliche attributed to Robert Heinlein:
  Put all your eggs in one basket, and then watch that basket!

This is an alternate strategy, better suited to deal with possible failures that you have some control over, and when the cost of speading the risk is higher.

It is akin to the idea that it is better to take one hundred steps down one path than to take one step down each of one hundred paths.

This is, for instance, a better way to write software. It is better to put more effort into a single piece of code to acomplish a given task, than is is to have two different ways to do it, each of which has been given half as much attention.

The single possible point of failure that has been well-tested is stronger than two untried points. One basket is easier to look after than many.

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