Why diversification works, correlation between assets, when concentration is actually the right call, asset allocation across classes, and rebalancing back to plan.
Not putting it all in one place
Lessons
Why diversification works — Spreading money across many holdings does not raise your expected return. It changes the range of outcomes around it - and in particular it removes the ones you cannot come back from. (11 min)
Correlation: what actually moves together — Diversification is only worth what the independence behind it is worth, and correlation is how that independence is measured - including the fact that it changes exactly when you need it not to. (12 min)
When concentration is the right call — Diversification is the correct default and it is not a law. The honest version of the argument is about what you would have to actually possess to justify departing from it. (10 min)
Asset allocation: the decision above the holdings — How much you hold in each broad type of asset shapes your experience far more than which particular items you choose inside them - and it is the decision most people spend the least time on. (14 min)
Rebalancing: returning to the plan — Left alone, a portfolio drifts towards whatever has done best - which is the same as drifting towards a bet on the recent past continuing. Rebalancing is the small, unpleasant act that undoes it. (9 min)