--- title: "Meaning & Key Takeaway of: Diversification is a way to protect…" description: "\"“Diversification is a way to protect financial consultants and stock brokers from ever looking really bad, but it also stops them from looking really g..." image: "https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg" --- # Diversification is a way to protect financial consultants… ![“Diversification is a way to protect financial consultants and stock brokers from ever looking really bad, but it also stops them from looking really good as well. What happens with broad diversification—holding a portfolio of, say, fifty or more different stocks—is that the winners will be…” quote by David Clark](https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg) [Download](https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg) [Open image](https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg) > ““Diversification is a way to protect financial consultants and stock brokers from ever looking really bad, but it also stops them from looking really good as well. What happens with broad diversification—holding a portfolio of, say, fifty or more different stocks—is that the winners will be canceled out by the losers, just as the losers will be canceled out by the winners. Diversification creates a situation that basically mimics the market or an index fund. An adviser who counsels diversification never looks very good or very bad, just average.”” [David Clark](https://sms4smile.com/quotes/author/david-clark/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Diversification reduces extreme outcomes, making performance average, protecting reputation but limiting standout success. **In simple terms:** Diversification smooths returns, avoiding big wins or losses. Key Takeaway Balance risk and reward through diversification. Themes risk management reputation performance investment strategy Mood cautious analytical Type advisory financial When to use this quote - financial planning - client advising - risk assessment - investment education - portfolio construction Key Concepts portfolio theory average outcomes market mimicry Questions to Reflect On - How much upside are you willing to sacrifice for stability? - When is concentration justified? A Different Perspective Diversification may limit upside potential for high-performing assets. ★ ★ ★ ★ ★ No ratings yet [Broad Diversification](https://sms4smile.com/quotes/about/broad-diversification-2417881/) [Counsels Diversification](https://sms4smile.com/quotes/about/counsels-diversification-2417884/) [Customer](https://sms4smile.com/quotes/about/customer/) [Diversification](https://sms4smile.com/quotes/about/diversification/) [Diversification Creates](https://sms4smile.com/quotes/about/diversification-creates-2417882/) [Diversification Way](https://sms4smile.com/quotes/about/diversification-way-2417883/) [Investing](https://sms4smile.com/quotes/about/investing/) [Money](https://sms4smile.com/quotes/about/money/) [Stock broker](https://sms4smile.com/quotes/about/stock-broker/) ## Related quotes > [In choosing a portfolio, investors should seek broad diversification, Further, they should understand that equities--and corporate bonds also--involve risk; that markets inevitably fluctuate; and…](https://sms4smile.com/quotes/harry-markowitz/in-choosing-a-portfolio-investors-should-seek-broad-diversification/) [Harry Markowitz](https://sms4smile.com/quotes/author/harry-markowitz/) > [Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued for making bad investment choices for clients.…](https://sms4smile.com/quotes/jim-rogers/diversification-is-something-that-stock-brokers-came-up-with-to/) [Jim Rogers](https://sms4smile.com/quotes/author/jim-rogers/) > [We live in a very risky world and investors should not get "carried away" with excessive allocations to equities, or for that matter, real…](https://sms4smile.com/quotes/john-c-bogle/we-live-in-a-very-risky-world-and-investors-should-not-get-carried/) [John C. Bogle](https://sms4smile.com/quotes/author/john-c-bogle/) > [In my community of minimalists, there are really wealthy people who work at stock brokerage firms, there are people who are unemployed, but it…](https://sms4smile.com/quotes/fumio-sasaki/in-my-community-of-minimalists-there-are-really-wealthy-people-who/) [Fumio Sasaki](https://sms4smile.com/quotes/author/fumio-sasaki/) > [You shouldn't trust the judgments of stock brokers picking individual stocks.](https://sms4smile.com/quotes/gary-a-klein/you-shouldn-t-trust-the-judgments-of-stock-brokers-picking-individual/) [Gary A. Klein](https://sms4smile.com/quotes/author/gary-a-klein/) > [“that each ejaculation contains several billion sperm cells –or roughly the same number as there are people in the world– which means that, in…](https://sms4smile.com/quotes/paul-auster/that-each-ejaculation-contains-several-billion-sperm-cells-or-roughly/) [Paul Auster](https://sms4smile.com/quotes/author/paul-auster/) > [Quinn's First Law of Investing is never to buy anything whose price you can't follow in the newspapers. An investment without a public marketplace…](https://sms4smile.com/quotes/jane-bryant-quinn/quinn-s-first-law-of-investing-is-never-to-buy-anything-whose-price/) [Jane Bryant Quinn](https://sms4smile.com/quotes/author/jane-bryant-quinn/) > [I find it funny because people complain about Brooklyn becoming too hip, but would they prefer stock brokers or gunfights or something?](https://sms4smile.com/quotes/kemp-muhl/i-find-it-funny-because-people-complain-about-brooklyn-becoming-too/) [Kemp Muhl](https://sms4smile.com/quotes/author/kemp-muhl/) > [I was a stock broker once. I think there is an absolute place for market investments. But they should never be the basis of…](https://sms4smile.com/quotes/barbara-boxer/i-was-a-stock-broker-once-i-think-there-is-an-absolute-place-for/) [Barbara Boxer](https://sms4smile.com/quotes/author/barbara-boxer/) > [Our standard prescription for the know-nothing investor with a long-term time horizon is a no-load index fund. I think that works better than relying…](https://sms4smile.com/quotes/charlie-munger/our-standard-prescription-for-the-know-nothing-investor-with-a-long/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [My father was an investment banker, a stock broker.](https://sms4smile.com/quotes/marc-randolph/my-father-was-an-investment-banker-a-stock-broker/) [Marc Randolph](https://sms4smile.com/quotes/author/marc-randolph/) > [I started digging and found that Israel signed a peace treaty with the United Arab Emirates after the country had diversified their economy, instead…](https://sms4smile.com/quotes/shai-agassi/i-started-digging-and-found-that-israel-signed-a-peace-treaty-with/) [Shai Agassi](https://sms4smile.com/quotes/author/shai-agassi/) > [Investors, of course, can, by their own behavior make stock ownership highly risky. And many do. Active trading, attempts to "time" market movements, inadequate…](https://sms4smile.com/quotes/warren-buffett/investors-of-course-can-by-their-own-behavior-make-stock-ownership/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [We believe that almost all really good investment records will involve relatively little diversification. The basic idea that it was hard to find good…](https://sms4smile.com/quotes/charlie-munger/we-believe-that-almost-all-really-good-investment-records-will/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [“How do you get past this?” Diversification is everything. You get past “this” by having lots of “that”s.”](https://sms4smile.com/quotes/james-altucher/how-do-you-get-past-this-diversification-is-everything-you-get-past/) [James Altucher](https://sms4smile.com/quotes/author/james-altucher/) ## More by David Clark > [“he's got more heavies out looking for you than are on the books of Weight Watchers”](https://sms4smile.com/quotes/david-clark/he-s-got-more-heavies-out-looking-for-you-than-are-on-the-books-of/) [David Clark](https://sms4smile.com/quotes/author/david-clark/) > [“I might have principles, but that doesn't mean I want to shop there”](https://sms4smile.com/quotes/david-clark/i-might-have-principles-but-that-doesn-t-mean-i-want-to-shop-there/) [David Clark](https://sms4smile.com/quotes/author/david-clark/) > [“...While grace does do away with the need for good works, it’s grace which also makes good works truly possible. If good works don’t…](https://sms4smile.com/quotes/david-clark/while-grace-does-do-away-with-the-need-for-good-works-it-s-grace/) [David Clark](https://sms4smile.com/quotes/author/david-clark/) > [“we had more people begging for snow than those that had bet on a white Christmas”](https://sms4smile.com/quotes/david-clark/we-had-more-people-begging-for-snow-than-those-that-had-bet-on-a/) [David Clark](https://sms4smile.com/quotes/author/david-clark/) > [“for a man of religion he was one of the most untrustworthy men I had ever met. He would fit right in”](https://sms4smile.com/quotes/david-clark/for-a-man-of-religion-he-was-one-of-the-most-untrustworthy-men-i-had/) [David Clark](https://sms4smile.com/quotes/author/david-clark/) [Explore all 6 David Clark quotes ](https://sms4smile.com/quotes/author/david-clark/) ## More Customer quotes > [“Start a business, not a startup”](https://sms4smile.com/quotes/anonymous/start-a-business-not-a-startup/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [Amongst the financial Twitterati, the term 'muppets' has come to describe any client used and abused by some financial predator. I've adopted the term…](https://sms4smile.com/quotes/barry-ritholtz/amongst-the-financial-twitterati-the-term-muppets-has-come-to/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Many early-stage entrepreneurs make one simple mistake: Describing this 'big picture' in vague concepts and words.](https://sms4smile.com/quotes/sunil-nagaraj/many-early-stage-entrepreneurs-make-one-simple-mistake-describing/) [Sunil Nagaraj](https://sms4smile.com/quotes/author/sunil-nagaraj/) > [The purpose of this book is to supply, in the form suitable for laymen, guidance in the adoption and execution of an investment policy.](https://sms4smile.com/quotes/benjamin-graham/the-purpose-of-this-book-is-to-supply-in-the-form-suitable-for-laymen/) [Benjamin Graham](https://sms4smile.com/quotes/author/benjamin-graham/) > [Don't think OF the market. Think AS the market.](https://sms4smile.com/quotes/michael-fishman/don-t-think-of-the-market-think-as-the-market/) [Michael Fishman](https://sms4smile.com/quotes/author/michael-fishman/) > [If Wall Street crashes, does Main Street follow? Not necessarily.](https://sms4smile.com/quotes/ben-bernanke/if-wall-street-crashes-does-main-street-follow-not-necessarily/) [Ben Bernanke](https://sms4smile.com/quotes/author/ben-bernanke/) > [The exact details of how you practice value investing will vary investor to investor, but the fundamental principle of scouring the world, looking for…](https://sms4smile.com/quotes/whitney-tilson/the-exact-details-of-how-you-practice-value-investing-will-vary/) [Whitney Tilson](https://sms4smile.com/quotes/author/whitney-tilson/) > [The best way to hold customers is to constantly figure out how to give them more for less.](https://sms4smile.com/quotes/philip-kotler/the-best-way-to-hold-customers-is-to-constantly-figure-out-how-to/) [Philip Kotler](https://sms4smile.com/quotes/author/philip-kotler/) > [Perhaps the most important reason to be skeptical of government inflation numbers is that the government, like a fox campaigning to guard a hen…](https://sms4smile.com/quotes/peter-schiff/perhaps-the-most-important-reason-to-be-skeptical-of-government/) [Peter Schiff](https://sms4smile.com/quotes/author/peter-schiff/) > [When the dollar collapses, it's not doing it in a vacuum. If the dollar loses value, it's doing so relative to some other currency.…](https://sms4smile.com/quotes/peter-schiff/when-the-dollar-collapses-it-s-not-doing-it-in-a-vacuum-if-the-dollar/) [Peter Schiff](https://sms4smile.com/quotes/author/peter-schiff/) > [Corporations invest in sophisticated CRM, or Customer Relationship Management, programs to effectively oversee their relationship with their customers at every point during the buying…](https://sms4smile.com/quotes/marc-ostrofsky/corporations-invest-in-sophisticated-crm-or-customer-relationship/) [Marc Ostrofsky](https://sms4smile.com/quotes/author/marc-ostrofsky/) > [I believe confusion is good. Worldwide market leaders gain when there is confusion in the market.](https://sms4smile.com/quotes/subhash-chandra/i-believe-confusion-is-good-worldwide-market-leaders-gain-when-there/) [Subhash Chandra](https://sms4smile.com/quotes/author/subhash-chandra/) > [Damn inflation, full speed ahead,' Greenspan has said in both action and word. I think an investor should believe him and invest accordingly.](https://sms4smile.com/quotes/bill-gross/damn-inflation-full-speed-ahead-greenspan-has-said-in-both-action-and/) [Bill Gross](https://sms4smile.com/quotes/author/bill-gross/) > [“When companies get big, they devote most of their care and feeding to the business that got them big. This is as it should…](https://sms4smile.com/quotes/eric-schmidt/when-companies-get-big-they-devote-most-of-their-care-and-feeding-to/) [Eric Schmidt](https://sms4smile.com/quotes/author/eric-schmidt/) > [“Salesmanship is usually the art of making it the prospect’s problem, the salesperson’s need or desire to earn money.”](https://sms4smile.com/quotes/mokokoma-mokhonoana/salesmanship-is-usually-the-art-of-making-it-the-prospect-s-problem/) [Mokokoma Mokhonoana](https://sms4smile.com/quotes/author/mokokoma-mokhonoana/) [Browse all 9,257 Customer quotes ](https://sms4smile.com/quotes/about/customer/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "“Diversification is a way to protect financial consultants and stock brokers from ever looking really bad, but it also stops them from looking really good as well. What happens with broad diversification—holding a portfolio of, say, fifty or more different stocks—is that the winners will be canceled out by the losers, just as the losers will be canceled out by the winners. Diversification creates a situation that basically mimics the market or an index fund. An adviser who counsels diversification never looks very good or very bad, just average.”", "creator": { "@type": "Person", "name": "David Clark" }, "isPartOf": { "@id": "https://sms4smile.com/quotes/#website" }, "url": "https://sms4smile.com/quotes/david-clark/diversification-is-a-way-to-protect-financial-consultants-and-stock/", "about": { "@type": "Thing", "name": "Customer" }, "@id": "https://sms4smile.com/quotes/david-clark/diversification-is-a-way-to-protect-financial-consultants-and-stock/#quotation", "image": { "@type": "ImageObject", "@id": "https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg", "contentUrl": "https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg", "url": "https://sms4smile.com/quotes/i/9fa/david-clark-54099_customer_diversification-is-a-way-to-protect-fina_2659904.jpg", "width": 1080, "height": 1080, "caption": "“Diversification is a way to protect financial consultants and stock brokers from ever looking really bad…” — David Clark", "creditText": "SMS4Smile Quotes", "creator": { "@id": "https://sms4smile.com/quotes/#organization" } } }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://sms4smile.com/" }, { "@type": "ListItem", "position": 2, "name": "Quotes", "item": "https://sms4smile.com/quotes/" }, { "@type": "ListItem", "position": 3, "name": "David Clark", "item": "https://sms4smile.com/quotes/author/david-clark/" }, { "@type": "ListItem", "position": 4, "name": "“Diversification is a way to protect...", "item": "https://sms4smile.com/quotes/david-clark/diversification-is-a-way-to-protect-financial-consultants-and-stock/" } ], "@id": "https://sms4smile.com/quotes/david-clark/diversification-is-a-way-to-protect-financial-consultants-and-stock/#breadcrumb" }, { "@type": "WebSite", "@id": "https://sms4smile.com/quotes/#website", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "publisher": { "@id": "https://sms4smile.com/quotes/#organization" } }, { "@type": "Organization", "@id": "https://sms4smile.com/quotes/#organization", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "logo": { "@type": "ImageObject", "url": "https://sms4smile.com/quotes/wp-content/themes/sq/assets/icons/icon-512.png", "width": 512, "height": 512 } } ] } ```