What can be inferred from Alex's investment pattern regarding diversification?

The inference that Alex would have benefited by diversifying his investments is rooted in the fundamental principles of investment strategy regarding risk management and return optimization. Diversification involves spreading investments across various financial instruments, industries, and other categories in order to reduce exposure to any single asset or risk.

In investment practice, a diversified portfolio typically exhibits less volatility compared to a concentrated portfolio. If Alex's investment pattern indicates over-reliance on a limited number of assets or sectors, he is likely exposed to higher risk. By incorporating a wider range of investments, it is probable that he could minimize the impact of adverse performance of any single investment or sector, leading to more stable returns.

Diversification can also enhance potential returns while managing risks, as different asset classes or sectors often perform differently under various market conditions. Hence, the inference that he would have benefited from diversifying his investments aligns with established investment principles emphasizing the importance of a balanced approach.