Diversification is mostly a covariance problem, not a count-of-lines problem. Desk note: Owning more things does not automatically lower risk if the underlying drivers are still the same. Why investors care: Good portfolio construction asks what can hurt the book together, not how many rows exist in the holdings table. Translate it into behavior: Ten software names can look diversified on paper and still act like one duration-sensitive trade. Where people usually get tripped up: The usual mistake is measuring diversification by ticket count instead of by factor overlap. Keep this nearby on the next review: Ask whether the market is mispricing the mechanism or simply narrating it loudly. A lot of confusion disappears once you separate the headline from the mechanism.