Diversification in a portfolio does not increase profit. Many investors are critical of diversification, saying that it decreases profits. Yet this is somewhat misleading. House, car, flight, and life insurance do not increase your earnings.
Similarly, a stock market crash could wipe you out, especially if you have to sell out in order to pay for other things. Following Murphy’s law, crises often happen at the same time.
Of course, diversification can also result in profit increases as compared to a specific scenario. An investor might decide that a specific industry is going to expand and invest in lots of stocks in this sector. If the industry crashed instead, investment diversification would have resulted in better results than the concentrated portfolio.