Diversification can't consistently beat the market over the long term

GA907
2023-06-25

I am not a fan of diversification. I believe that through diversification you can't consistently beat the market over the long term.

I invest in 2-3 sectors and 2-3 stocks in each sector. My approach is simple: I do top-down analysis, find the most undervalued sectors then go all in (well almost) in 1-3 stocks in those sectors.

Of course, the downside is, if I am wrong then it will hurt. In 2021 and 2022 I was 100% and ~90% all energy respectively. This year my energy exposure has been anywhere between 15%-25%.

It has been a drag on my overall portfolio, however since my portfolio was over 50% in META $Meta Platforms(META)$ (now about 35%), I am doing fine. As 1st half of 2023 is coming to an end, I increased my energy exposure to ~25% as I believe 2nd half should be a little bit better. We'll see!

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