Think of your favourite pie. Now think of your four or five favourite pies. Then imagine having them all in one pie, in juicy segments.
This is the dream of asset allocation - dividing up your investments into your favourite assets.
The main asset classes are equities (stocks), fixed income (bonds) and cash. Some investors also like to throw in a little commercial property. The hope is that if you shrewdly allocate to assets, you may smooth the ups and downs and end up with a better result. That's diversification.
It means you can have your cake and eat it... or pie.