Why Diversification Is a Dangerous Myth

In this episode of Wealth Strategy Deep Dives, Dave Wolcott challenges one of the most widely accepted beliefs in investing: diversification as Wall Street teaches it. Dave explains why owning dozens—or even hundreds—of stocks doesn't actually reduce risk, and how traditional portfolios remain dangerously exposed to the same systemic forces, from central bank policy to market sentiment and geopolitical shocks. When markets correct, correlations converge, revealing that most investors aren't diversified at all—they're simply concentrated in a single financial system.

Dave breaks down three core myths: that more stocks equal less risk, that traditional asset allocation creates true protection, and that long-term investing alone eliminates danger. He then contrasts this with how the ultra-wealthy actually diversify—across asset classes, income streams, tax treatment, and control. By owning real assets like private real estate, private credit, energy, and operating businesses, wealthy investors reduce reliance on market appreciation and instead focus on cash flow, tax efficiency, and structural resilience. As Dave reminds us, true diversification isn't about more tickers—it's about less dependency.

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