Top Investing Quotes from Contrarians

“Wide diversification is only required when investors do not understand what they are doing." — Warren Buffett

According to investment guru Warren Buffett diversification is only important if you don’t know your market, but once you’ve gotten your feet wet and are confidence in your investments, you can adjust your portfolio accordingly and make bigger gambles. The danger of over-diversification is that it reduces a portfolio's returns without necessarily reducing its risk. Each new investment added to a portfolio lowers its overall risk profile. But at the same time, these incremental additions also reduce the portfolio's expected return.