Warren Buffett's long-term business partner Charlie Munger doesn't like the recent speculative frenzy in stocks like GameStop. "It's really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors," said Munger. Such activity "must end badly". That didn't go down well in some quarters. Zero-commission broker and retail favourite Robinhood complained Munger was being "elitist", while he was derided online as "an old guy who does not understand today's more modern markets,", noted veteran investment manager Richard Bernstein.

That criticism is ageist and displays a “general underappreciation of the risks associated with investing”, said Bernstein. That’s true – Munger’s anti-gambling sentiments are perfectly reasonable. Less reasonable, however, was what Munger went on to say about diversification.

“A lot of people think if they have 100 stocks they’re investing more professionally than they are if they have four or five”, he said. This kind of diversification is “diworsification”, with Munger saying he is “way more comfortable owning two or three stocks which I think I know something about”.

Really? This is risky thinking and reeks of overconfidence. Indeed, the irony is it will only encourage newbies tempted to bet big on a handful of risky assets like Tesla and GameStop and Bitcoin. Munger should be making the case for more diversification – not less.