In the context of investment, what does diversification aim to accomplish?

Diversification aims to minimize potential losses by spreading out investments across different asset classes, sectors, or geographic regions. The fundamental principle behind diversification is that not all investments will respond to market changes in the same way. By holding a variety of assets, an investor can reduce the overall portfolio risk because the negative performance of one investment may be offset by the positive performance of another.

This strategy doesn't guarantee against loss but helps protect against significant downturns in any single investment or asset class. For instance, if an investor solely invests in technology stocks and the tech sector experiences a downturn, their entire investment portfolio may suffer significantly. In contrast, a diversified portfolio that includes bonds, real estate, and international stocks might not be as heavily impacted, considering those asset classes could perform better during the same period.

The other options presented do not accurately capture the essence of diversification. They either suggest a focus on a single asset or strategy or imply a lack of attention to risk management, which contradicts the core goal of diversification in investment strategy.