Why Diversification May Not Make Sense Why Emphasis on Market Activity is Bad

Why Diversifying Makes Sense

Most investment professionals agree that although diversification is no guarantee against loss, it is a prudent strategy to adopt towards your long-range financial objectives. There are many studies demonstrating why diversification works, but this would involve delving into lengthy arcane financial formulas. Put simply, by spreading your investments across various sectors or industries with low correlation to each other, you reduce price volatility by the fact that not all industries and sectors move up and down at the same time or at the same rate. This provides for a more consistent overall portfolio performance.
Source: http://www.investopedia.com/articles/01/051601.asp