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Charlie's Money

AI-powered stock analysis 📈 Finding growth stocks before the crowd

Is Diversification Hurting Your Portfolio?

Is Diversification Hurting Your Portfolio?

Joel Greenblatt points out that owning 500 stocks instead of 5 barely narrows your range of returns. Adding your sixth-, tenth-, and twentieth-best ideas can lower volatility a little, but it can also dilute the positions you believe in most. Diversification only helps if your holdings behave differently. Five highly correlated AI stocks can be one big bet.

This prompt audits your whole portfolio in seven steps:

  • Scores your concentration and diversification quality from 0 to 100

  • Groups your holdings into risk clusters and shows how many independent bets you really have

  • Compares your conviction with your position size, so you can spot a 9-conviction idea sitting at 2%

  • Labels each holding as Core, Diversifier, Diluter, Duplicate or Orphan

  • Ends with a verdict, your three highest-impact changes and the risk you're probably missing

Paste in your holdings, weights and one-line theses, and it does the rest.

Diversified or Diluted?

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Which of these would you be most likely to pay for?