I was watching an online video when the interviewee mentioned the title of this post – Diversification is for idiots!

Ouch!

Well, didn’t Warren Buffett mentioned something similar when he said – Diversification is protection against ignorance? So should we mere mortals still practice diversification when the investment gods tout the opposite?

In my opinion, we still should. And here’s why:

Too many people think they know alot when they don’t. Behavioral finance calls it Over-confidence bias. Many successful investors do not promote diversification. And we.., no, make it I, the ordinary investor, should follow the advice  of those who succeeded isn’t it. That’s what investment book authors and seminar sellers will tell you.

The problem is, these successful investors are few and far between. They are outliers. If everybody is a outlier, then there will be no outliers. If everyone is successful in implementing their strategies, then there ...