In this episode of the Odd Lots podcast, hosts Joe Weisenthal and Tracy Alloway interview Krishna Memani, CIO of the Lafayette College Endowments, about the concept of diversification in investment portfolios. They discuss the historical underperformance of diversified portfolios compared to concentrated investments in big US tech stocks, despite diversification being a core tenet of finance. Memani explains the theoretical basis for diversification and why it hasn't worked as expected over the past few decades, citing factors like the tech supremacy of the S&P 500, dollar-related global flows, and the impact of benchmark indices. The conversation explores the role of domestic versus international flows, the challenges faced by active fund managers, and the potential for a shift in the relative performance of international versus US stocks, while also considering career risks associated with deviating from established diversification strategies.
