My way of thinking is over 500 stocks is plenty of diversification. The Stars model also has a variation that holds bitcoin. This is an alternative class of investment that may hold up better in an environment of rising interest rates or other forms of uncertainty.

Diversification for the sake of diversification is a very bad strategy. Why do I want to own something that has demonstrated that it underperforms the S&P by 7-10 percentage points per year? I don’t.

The theory is that if you are well diversified you will have investments that rise when others fall. Why not just own the best investments based on their relative performance to the S&P. In that case hopefully all of your investments will rise.

Successful investors do not hold diversified portfolios. They hold concentrated portfolios like their stock.

The Stars buy and hold strategy outperforms the S&P by 19 percentage points per year over the past 14 years. It is hard to hold anything other than what it holds with that outperformance.