Do I Need a Diversified Portfolio? And Other Risk/Reward Questions

“Wide diversification is only required when investors do not understand what they are doing.”

These are strong words from Warren Buffet, the CEO of Berkshire Hathaway, which arguably is its own diversified investment. Buffet has been known to say that concentration builds wealth and diversification protects wealth; that diversification is a hedge for when you are not knowledgeable.

That said, what should you do with your nest egg: build wealth or protect it?