Rich People Don’t Diversify. They Concentrate Then Protect.

Diversification feels smart because it protects you from looking stupid. But looking smart and getting rich are opposite strategies.

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Your financial advisor tells you to diversify.

Spread your investments across stocks, bonds, real estate, international markets. Don’t put all your eggs in one basket. Stay balanced. Stay safe.

It sounds smart, right?

It is smart—if your goal is to never look stupid.

But looking smart and getting rich are opposite strategies. And here’s what nobody tells you: diversification is designed to prevent you from failing spectacularly, which also prevents you from succeeding spectacularly.

You can’t lose big. But you also can’t win big. And you need to win big, because that’s the only way wealth actually gets created.

Warren Buffett said it plainly: “Diversification is protection against ignorance. It makes little sense if you know what you’re doing.”

Think about what that means. Diversification isn’t a wealth-building strategy. It’s an ignorance-management strategy.