I've always found the idea of diversification as a rule, or for its own sake to be troubling. Say you have 100k. You could put it all in Apple, or put 99k in

I've always found the idea of diversification as a rule, or for its own sake to be troubling. Say you have 100k. You could put it all in Apple, or put 99k in Apple and then buy puts to protect against a sudden decline in Apple with the remaining 1k. (might cost more, not sure.) Or you could split it up into 6 companies. Are any of the other 5 going to be as high quality as apple? I think diversification comes from the belief that you can't pick stocks so you might as well pick several and hope they work out on average. I think that this is not so much the case when you spend a bit of time investigating. I've not found it to be the case, at least. (What I can't do is pick timing, but I can pick stocks, pretty reliably for 20 years or so.) Right now Apple is at $100ish, and a Jan 2016 $90 put would cost $8ish. This means that the most you could lose in that time period is %18 of your money... and that's assuming the company completely craters.... if it just drops to $90 because they multiply the dividend by a lot, you don't really care. If, however, a nuke hits cupertino, you're covered. I like that a lot better than guessing what Tesla will be at in the future. (I think Tesla is a good company, for instance, but the risk is orders of magnitude higher.)