“Diversification means always having to say you’re sorry.” - Brian Portnoy
If everything in your portfolios is making money, then by definition those assets are correlated. You are only picking or holding current winners, so if the world changes those winners can become losers. You must have some losers in the portfolio if you say you want diversification.
If you sell your losers and replace them with winners with similar characteristics to other assets in your portfolio, you are reducing your diversification. Investors should defend their losers if there is a strong rational reason for holding it.
The wisdom of crowds is based on the foundation that the crowd has participants that have different perspectives. Everyone is not supposed to be alike otherwise, your crowd is a herd or a mob. All perspectives cannot be right. Having wrong opinions is required.
Every portfolio manager should say he is sorry about something in his portfolio.
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