Is diversification a sham? Yet this is the advice financial advisors are constantly giving us. I can't stop thinking that it's all marketing hoax... giving people the false hope that there exists a real "strategy" and logic to anything. To me it's equivalent to proclaiming that sticking to one brand of lottery is a poor method whereas purchasing multiple brands of lottery tickets increases your chances of winning significantly. It just doesn't seem intuitive to me that splitting up a pot of money into multiple pots, each of which is now used to buy various 'diversified' lottery ticket brands, in any way increases your chance of winning. If it were the case then we'd be hearing abut the best ratio to use. Or, why not just ignore the 'poor' performing ones altogether. Examples of multiple lottery brands are for example Powerball / Mega Millions / The Big Game or in Canada Lotto 6/49, Lotto Max. If you only play one, would say those advisors, you're not being smart. Can someone with a stronger statistical background explain how diversification is a valid technique for increasing ones average winning ratio? And why this technique is suspiciously absent as a tool in any other risky behavior. I said "curiously" because I have a strong suspicion that it's a bogus methodology. It's like suggesting: "to reduce the risk of death in the sport of skydiving, you should also take up hang gliding. This will spread out the risk. as you're devoting less total time to just one thing." This is not homework. Just a thought experiment... one that's been bothering me for years.