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The Intelligent Investor on Diversification

1) Not against ignorance.
2) Not reducing risk.
3) But to increase the chances of consistent winning on a portfolio basis. 

The exact definition of diversification have different meanings to different people. Some think if I have 10 stocks, I'm diversified, some think if I have 5 stocks in all different sectors, I'm diversified. That form of diversification is ok except those who hold 40 companies, that is "foolish"! What do an individual investor have the time to monitor 40 companies??? 

From what I understand, Warren Buffet has his own form of diversification, if you look at his holdings, he holds many stocks too but most of them are quality. I believe he is advocating towards quality, not quantity. He believes you should not diversify for the sake of minimizing your risk because if you don't know a company's business well, does it even make sense to invest and be a co-owner of it? That is the point I believe he is coming from and hence he said "diversification is for the ignorant" if you are knowledgeable about the companies you invest in, you can invest in any amount as long its within your control and within your knowledge. Even diversification needs knowledge as well!

In equity investing, making high-quality decisions in - (1) What to buy?, and (2) At what price to buy? - are far more important than making many decisions or even - When to buy? If one can buy into good stock or business that is worth $1 a share in intrinsic value which is going to grow further over time, but for only 50 cents, how not to make good money given enough time? 

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