Howard Marks：Risk Revisited Again, Excerpt 10

I touched above on concentration risk, but we should also think about the flip side: the risk of overdiversification. If you have just a few holdings in a portfolio, or if an institution employs just a few managers, one bad decision can do significant damage to results. But if you have a very large number of holdings or managers, no one of them can have much of a positive impact on performance. Nobody invests in just the one stock or manager they expect to perform best, but as the number of positions is expanded, the standards for inclusion may decline. Peter Lynch coined the term “diworstification” to describe the process through which lesser investments are added to portfolios, making the potential riskadjusted return worse.

Source： https://www.oaktreecapital.com/docs/default-source/memos/2015-06-08-risk-revisited-again.pdf
Locator：Memo, excerpt 10 · Verified：2026-10-19 · Verification：Short excerpt

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