We need to have full confidence in our judgement about a company if we are to make a serious financial commitment to it. But, the strength of our belief that we are right has nothing to do with the validity of our judgement. And, if that sounds weird, blame it on behavioral psychology.
Our subject is diversification and the blind reliance many investors place on the statistical correlation of prices. Correlation is not a term most people are familiar with. It is the mutual relationship between two or more things. In finance and investing it is most often thought of as price statistical correlation. Like much of statistics this can lead you down the garden path.
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