From theitalianleathersofa.com/diversifi…

In the early 1950s, Harry Markowitz demonstrated that there exists an “optimal” portfolio which has the highest investment return for a given level of risk. For his work, which created the field of modern portfolio theory (“MPT”), Markowitz won a Nobel Prize in Economics in the early 1990s.

Diversification means spreading your investments across a variety of different assets, such as stocks, bonds, real estate, commodities, and alternative investments. The purpose of diversification is to reduce the risk of loss by avoiding over-exposure to any one particular asset or sector. By diversifying your investment portfolio, you can potentially minimize the impact of market volatility and protect yourself from significant losses. It is important to note that diversification does not guarantee profits or eliminate all risks, but it can help to manage risk and improve the potential for long-term investment success.