"It really doesn't change all that much" In your toy example, it's a huge difference. You have a 1/3 chance of losing all your money without it, but a zero cha

"It really doesn't change all that much" In your toy example, it's a huge difference. You have a 1/3 chance of losing all your money without it, but a zero chance if you own all three. With the stock market, it's not clear exactly what diversification gets you because nobody has the future correlation matrix, but it must be worth something. I think millions of people are implicitly assuming the whole market can't go to zero.