Horizon Kinetics On Flawed Diversification Theory

From Horizon Kinetics' June research piece [pdf]

"The central tenet of modern diversification is to eliminate the unsystematic risk events in a portfolio, so that the positive performance of some securities will offset the negative performance of others. The policy is to own many investments, as opposed to simply owning a few, and estimate future rates of return by extrapolating past rates of return. This seemingly scientific and statistically based reasoning is extended beyond the individual security level to categories of investments. It is therefore also the practice to establish some meaningful international exposure as a risk diversifier for a U.S. equity portfolio. Amongst institutions, this orthodoxy has already been accomplished. It is also becoming the norm for individual investors, with software-generated asset allocation models ('robo advisers') suggesting optimal mixes of ETFs."

Diversification is another one of the discredited tenets of modern finance. ("Diworsification")