How does diversification affect investment returns?

[EnSabahNur]

If doing bottom up stock picking then diversification for uncorrelated return is probably not an important consideration. Generally it would be prudent for bottom up not to focus everything on say shipping or tech etc to reduce sector risk, rather than statistical correlation. So Buffett's portfolio though very tilted towards consumer related stocks cause he understands that business, or simply coincidental with US growth driver; it is also into financials, transport, energy and recently tech though most are still consumer driven ideas on bottom up basis.

Indeed, diversification looks to be the end result, rather than means to an end. As one gets more into investing....

(1) The more he understands, the more ignorant he/she realizes he/she is. And when he/she learns more as a result of his ignorance, about different business models, entrepreneur way of thinking etc....he/she gravitates towards having more diversification of stocks

(2) The more he/she observes, the more he/she realizes that every dog has its day. That is, markets work in cycles. So it might be better to "get lucky" than been skillful about been there (or not there) at the right time and right position sizing.

Isn't diversification the means to an end result, which is risk control?
I don't consciously build my portfolio towards diversification, but I diversify because I am scared a wrong pick wipes out a chunk of my wealth.