Does anyone avoid diversification (like me)?

[u/Grouchy-Tomorrow3429]

Seems like there’s some great generic advice. Pay off debt, especially high rate debt. Make more than you spend. Invest the difference. DIVERSIFY!

I think this is terrific advice for most people.

I’m not the type.

I love to study stocks and balance sheets and news. I only own 11 stocks, Reddit being the biggest position so thank you for using Reddit!

While I own a little spy and QQQ, I actively and opportunistically sell naked puts and calls, have been for 20 years. I’m ok with volatility, in fact I’d like more.

In my view, with a little effort you can outperform SPY or VOO. And it’s perfectly OK for 99% of people if you don’t want to put in that extra effort. Getting a market return is amazing. I recommend VOO to my mom.

But it’s not that hard to outperform. I don’t do this, but off the top of my head you could put 100% of your account in VOO. Then sell 1 naked call on SPCX strike 450. That’s a market return plus $100.

If you find a few of these ridiculous things per year, it starts to feel like extra dividends that you can just buy more VOO. This is just an idea off the top of my head for this post, but I look for a lot of opportunities like that.

So many people watch YouTube or look for training courses and stuff like that and I feel like they’re wasting their money and time, and getting bad advice.

Feel free to join the subreddit r/ThetaGang if you’re interested in selling options and letting theta work for you. It’s not my group, but I’ve been a part of it for a few years and the guys are great.

[u/WealthHuman9754]

I have two sleeves, a diversified sleeve, and a concentrated sleeve. The best, or worst, of both worlds.

[u/Grouchy-Tomorrow3429 → u/WealthHuman9754]

Yeah, I actually do the same

My 401(k) at work is 100% S&P 500 so that’s mostly diversified

And I own a rental property so I guess that is considered diversified from Stocks

[u/Kind_Ad_6126 → u/Grouchy-Tomorrow3429]

Saying S&P 500 is a mostly diversified investment is wild.

[u/wild_b_cat]

You are aware, I hope, that about a bajillion studies have demonstrated that it is actually quite difficult to beat the market, which is why the few people who consistently can get paid billions to do so.

I'm just curious where that fits with your worldview. If someone can beat the market with a little effort, could they not, say, do that with someone else's money and take a fee? I would personally be willing to pay a premium for predictable over performance, and so would many others.

You only give one example:

off the top of my head you could put 100% of your account in VOO. Then sell 1 naked call on SPCX strike 450. That’s a market return plus $100.

... are you assuming that call will never ever be exercised? In that case, who do you think is buying the call?

[u/Grouchy-Tomorrow3429 → u/wild_b_cat]

So in my example, the people buying the call are people needing to limit their theoretical risk. Like people selling a strike 250 call that need to limit their risk to $20,000 for margin reasons will buy the strike 450 call.

There are no intelligent people buying strike 450 calls because they think it’ll go over 450 in a few months. Individuals need to limit their risk for margin reasons, institutions need to limit their risk on paper.

If you think about it another way, let’s say I bought a strike 450 call, spent one dollar parentheses $100 parentheses. Then I told you I spent $100 on a SpaceX call. What would you think? Well, there’s zero chance that SpaceX becomes the biggest company in the world in the next couple months, bigger than Nvidia and Apple, so there’s zero chance that the stock goes to 450. You’d think it was a fool and completely wasting my money.

I’m the one selling worthless options.

[u/wild_b_cat → u/Grouchy-Tomorrow3429]

So your strategy is based on the belief that you know more about the market than your counterparty?

[u/mehdizare]

Concentration and diversification are really two different bets: one on your own research edge, the other on not needing one. I've found the harder part isn't the analysis, it's whether the process survives a stretch where the concentrated sleeve lags for years and the cash flow behind it changes. Do you size positions off a written rule, or off conviction at the time?

[u/Kind_Ad_6126 → u/mehdizare]

Trading discipline and a thorough trading journal are essential. That includes tracking mental state on trades honestly.

[u/mehdizare → u/Kind_Ad_6126]

Agreed on the journal, and the mental-state line is the part most people skip. What helped me was writing the reason for the size before the trade rather than after, so the review can tell a thesis change from a flinch.

[u/Grouchy-Tomorrow3429 → u/Kind_Ad_6126]

I completely agree with keeping track. Never thought to track my mental state as I’m used to taking big swings, something like the tariffs of 2025 was emotional though.

[u/Grouchy-Tomorrow3429 → u/mehdizare]

So I’m a little different.

Let’s say I have a $3,000,000 acct. One option is to put all into VOO.

I’d instead choose to put $1,000,000 into UPRO and get similar returns, I know it’s not exactly the same, but just giving you a simple example, and use the other $2,000,000 for other stuff.

First you collect interest on the $2,000,000. Second you can sell almost worthless options and get roughly a 12% return on this. In reality it feels like getting huge dividends every month or like collecting rent income.

But with the combination of the two, the monthly returns, help to feed the faster growth.

And let’s imagine the market goes down 33%.

The guy with 3 mil in VOO is down a million.

Me with 1 mil in UPRO am down close to a million but not quite. But I’m still collecting interest and returns on the $2 million That’s relatively safe.

[u/AutoModerator → u/[deleted]]

Your submission was automatically removed because it contains a keyword not suitable for /r/investing. Common slang prevalent on meme subreddits, low effort platitudes, or derogatory political slang are not appropriate here. I am a bot and sometimes not the smartest so if you feel your comment was removed in error please message the moderators.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/LogicMFDoYouSpeakIT]

Investing in Reddit? I don't know what will happen to it in 2 years when the main antagonist is gone.

I'm certainly not betting my retirement on couch jokes.

[u/Grouchy-Tomorrow3429 → u/LogicMFDoYouSpeakIT]

I like it. I find myself using Reddit more than anything else. People actually go here to search now

[u/LogicMFDoYouSpeakIT → u/Grouchy-Tomorrow3429]

Reddit is possible the biggest store of mis-information on the web.

I would not be surprised if AI quietly start avoiding it once more normal people start using AI.

[u/Grouchy-Tomorrow3429 → u/LogicMFDoYouSpeakIT]

So I don’t think AI is getting facts from Reddit. More like opinions on countertops and running. Also, how to sound more like a human when responding.

[u/RoundDefinition7957]

If you are going to diversify, buy 100%S&P and forget about it. If you enjoy buyng stocks stay concentrated. Dont focus on beating the S&P 500, your odds are low over a long period of time. It is not because of effort, it is because you lack insider information or the proprietary research that only elite hedge funds have, to have the conviction to put real money behind risk. I out 0.5% in UNH a year ago, Tepper had enough conviction to put 10%.

[u/Grouchy-Tomorrow3429 → u/RoundDefinition7957]

I def don’t have any insider info and I mostly agree with you. But some people make such foolish trades that I’m so happy to be on the other side, taking the theoretical risk and I think that’s why I outperform.

I do own ETFs like SPY and TQQQ as a base.

[u/RoundDefinition7957 → u/Grouchy-Tomorrow3429]

yes -your perspective is not unlike what Peter Lynch suggested in 'One Up on Wall Street'. works as long as you know how to read the long and blathery 'Management Commentary' section in the 10Q - where all the gremlins are hidden

[u/Fixitwithducttape42]

Nope, I rather have my investments spread out. Picking single stocks is too much like gambling with my money to me. And I know the house will eventually win against me.

[u/Grouchy-Tomorrow3429 → u/Fixitwithducttape42]

And that’s the smartest decision!

[u/Ok_Transition7785]

Hey look its the original stock picker! Will fare as well as most end up :-D

[u/AutoModerator → u/[deleted]]

Your submission was automatically removed because it contains a keyword not suitable for /r/investing. Common slang prevalent on meme subreddits, low effort platitudes, or derogatory political slang are not appropriate here. I am a bot and sometimes not the smartest so if you feel your comment was removed in error please message the moderators.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/stonks2rkts]

diversification is for the weak. they need to spread out their risks because they don't know what they're doing. sorry i hurt your feelings you weak bitches.