In practice very few investments outperform the S&P. Over the last 100 years equities have outperformed cash, bonds, real estate, gold, and international stocks by a factor of 2. At the same time the dollar is one of the strongest currencies in the world.

Warren Buffet doesn’t believe in diversification. He held 50% AAPL for a long time and now holds over half of liquid assets in cash. Charlie Munger believed you only needed 2 or 3 great holdings. The wealth of many wealthy investors is in their company stock. Smart money doesn’t believe in diversification.

The Stars buy and hold strategy holds SPY and TQQQ. These two cap weighted ETFs hold mostly the 100 best 1.5% of all stocks. They are not only diversified but are mostly outperforming the S&P in the long term.

Other classes of investments provide very little protection in a major correction because everything is auto correlated as investors often liquidate everything. Many investors hold the standard portfolio of 60% equities and 40% bonds. This makes no sense with the S&P having a return of 13% per year over the past 15 years compared to bonds at about 6%. Bonds are underperforming by 7% per year.