The perils of diversification

I could have also named this piece The joy of concentration, which is the same idea, viewed from another angle. Most readers would feel that these would be strange things to say. Surely, they must be an error. Isn't it axiomatic that diversification is something that no investor should ignore because it's what saves our investments from all kinds of perils? That's absolutely true, but there are a lot of hidden problems with diversification that investors tend to ignore. The ideal investment portfolio - one that you would create if you could see into the future - would have just one stock. This would be the stock that's going to generate the maximum returns. After all, if you knew what was going to happen, why would you invest even