Over-Diversification
In turbulent stock market times we all wonder if we’ve diversified enough (in my case, I don’t even wonder 
).
Asset diversification is a good thing for most investors, but there can be too much of a good thing:
The common consensus is that a well-balanced portfolio with approximately 20 stocks diversifies away the maximum amount of market risk. Owning additional stocks takes away the potential of big gainers significantly impacting your bottom line, as is the case with large mutual funds investing in hundreds of stocks. We leave you with the sage words of the “Oracle of Omaha”, Warren Buffett: “wide diversification is only required when investors do not understand what they are doing”.
Improper diversification is no picnic either. For years, I had holdings in three different “lifestyle” funds at one time in my 401(k) because I didn’t understand their differences. All I knew is that they were different.
Hi Sarcasticynic,
long time no see.
How’s your portfolio doing these days?
I’m sticking with sector concentration for now, diversification is for mature people ( 🙂 )
Sorry for the absence – my blog tries to explain that. Well, as is probably true of most portfolios these days, mine’s a’sufferin’. Sector Concentration is not for the faint of heart. A friend had most of his holdings in NASDAQ a while back and lost 75% of his portfolio.