The Intellectual
Investor’s
Lexicon
By Vitaliy Katsenelson
D
Diversification
Diversification is the only free lunch an investor will ever get, as risk reduction doesn’t need to lead to subsequent reduction in return.
Diversification (Noah’s Ark critique)
The story of Noah’s Ark comes to mind: gather two of every kind to survive the flood. This is how Wall Street and academia approach diversification; but as Warren Buffett put it, that’s how you create a zoo. We are not in the zoo business, just intent on picking the right animals.
