Nobel-prize winning economist Harry Markowitz wrote that ‘diversification is the only free lunch in finance’. A free lunch sounds good, but the reality is often bland sandwiches, a plate of crisps and lukewarm coffee. Private investors do not need to diversify as much as they think. Diversification is conventional wisdom. The idea makes a lot of sense: by diversifying across a broad range of assets an investor can reduce both risk and volatility. For those who are risk-averse or are coming to their autumn years, this strategy can certainly help one sleep at night.

Explain why investing your money in ten well-researched shares may be a far better strategy than holding a well-diversified portfolio of twenty or more shares.