Don't diversify beyond a point

Too much diversification harms your chances of beating the broad market indices convincingly

If you wish to outperform a broad market index, you need to follow a concentrated approach. Not only should the funds that you bet on put their money in a limited number of stocks, the number of funds you hold in your portfolio should also not be excessive. Diversify too much and you not only diversify away the risk in your portfolio but also the possibility of generating alpha. 

The allocation to each stock is linked to the total number of stocks in the portfolio. As the number of stocks rises, the probability of making sub-optimal allocations also rises. In a