Misunderstandings of Diversification
“Diversify” is one of the most generic investing advice given. Yet some of the most famous asset allocators across industries, like Warren Buffett and Elon Musk, don’t do this, and publicly talk about doing the opposite. Why the mismatch? Three misunderstandings about diversification - 1) Adding a “risky” bet can actually help you diversify. Diversification is calculated on correlation with your portfolio, not on volatility of each bet. Google doing Waymo may seem really risky - it's self dri...