Diversification, Concentration, or Variance Collapse?
Real Vision recently argued that “diversification is dead.”
They say fiat debasement and inflation raise the hurdle to ~11%, so broad, watered-down portfolios can’t cut it.
Their solution: hyper-concentration.
It sounds bold, but let’s look closer.
1. Diversification = Spreading Variance
Traditional diversification accepts mediocrity to reduce blowups.
If one stock drops 50%, the other 99 cushion you.
But in return, you lock yourself into average outcomes that can’t outrun debasement.
Diversification smooths variance, but it doesn’t solve it.
2. Concentration = Amplifying Variance
Real Vision’s answer is to swing the other way: bet big on the few winners.
That raises the ceiling — but it also raises the floor.
If you pick right, you win big. If you pick wrong, you implode.
Concentration doesn’t collapse variance; it just concentrates it.
3. Variance Collapse = Eliminating Variance
The true solution isn’t spreading or concentrating variance.
It’s collapsing it.
Variance collapse doesn’t rely on owning the right basket or the right single name.
It authors the sequence itself.
It turns randomness into causality, producing cashflow precision — not exposure.
4. The Hidden Truth About Diversification
Diversification was always less about risk and more about asset-gathering.
It made it easy for institutions to manage trillions, smooth client emotions, and justify fees.
It wasn’t designed to beat debasement.
It was designed to scale capital.
5. The Hedge Against Debasement
Diversification spreads variance.
Concentration amplifies variance.
Only variance collapse eliminates it.
That’s the real hedge against debasement — not another “portfolio construction tweak,” but authorship.
In a world already trending toward single-asset dominance — S&P concentration, dollar dominance, Bitcoin in crypto — the edge isn’t in choosing between baskets or bets.
The edge is in collapsing variance itself.
Conclusion