John Maeland @Lordhumpe: "Why Do People Over-Diversify? 🤔 Most..."

Norway

Why Do People Over-Diversify? 🤔 Most people invest in stocks because they believe they can beat the index – otherwise, why not just buy the index itself? When building a portfolio, it naturally means holding more than one stock you believe will outperform your reference benchmark. Some investors hold 5, others 10, some 20 – and many stretch it all the way to 50–100 names. I get the idea of diversification. It’s about reducing asymmetric risk. But once you cross into “over-diversification,” you end up with a portfolio that hardly moves. In other words: you own the market, but you still pay the price of active risk. The problem? 🔹 The more companies and markets you combine, the less control you actually have. 🔹 You don’t know each company or sector well enough to time entries, exits, or ride through macro storms. 🔹 It becomes diluted – there’s no conviction left. Personally, I stay between 10–13 holdings. Never more than 15, never less than 10. The number itself doesn’t matter – what matters is picking the best of the best within your thesis and your knowledge. So the real question is: why do people over-diversify? Anything above 30–40 names quickly looks like over-diversification to me – and that can end up being wasted money. Or what do you think? $SPX500 $NSDQ100 $BTC $OIL $GOLD

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OIL

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