Warren Buffett is an all-star on Wall Street; every word he speaks is treated as if it has come from on high. There's a good reason for that, given that Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has dramatically outperformed the S 500 index over the long term. But you need to take even this sage's advice with a grain of salt. That's particularly true when it comes to diversification.

The so-called Oracle of Omaha didn't mince words with his comments on diversification, which is a tried-and-true investment tactic. In short, he came out against the practice, explaining that, "diversification is protection against ignorance. It makes little sense if you know what you are doing." That's pretty rough and might even hit at the ego of some investors, most of which would like to think they know what they are doing.

Image source: The Motley Fool.

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Source Fool.com