How Much Diversification is Enough?

@article{Statman2002HowMD,
  title={How Much Diversification is Enough?},
  author={Meir Statman},
  journal={FEN: Behavioral Finance (Topic)},
  year={2002}
}
  • M. Statman
  • Published 1 October 2002
  • Economics
  • FEN: Behavioral Finance (Topic)
Levels of diversification in the portfolios of investors present a puzzle. The benefits of diversification, measured by the rules of mean-variance portfolio theory, have increased in recent years, yet levels of diversification did not increase, remaining much below their optimal levels. We find that today's optimal level of diversification, measured by the rules of mean-variance portfolio theory, exceeds 120 stocks, and argue that the diversification puzzle is solved within Shefrin and Statman… 

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