I was a falling knife value investor. Trouble was I never seemed to ever find the value in them. Thank God I also had Exxon and Texaco at the time to mitigate most of the damage.
When I first started investing at the ripe young age of 15 (mowed lawns since age 10, started caddying at age 12, and parents gifted me a little), my Uncle Mick Cheap Bastard (TM) traits were already expressing themselves, as I scoured the stock pages, looking for low PE stocks trading around their 52 week low. My positions back then were concentrated to maybe just a few.
Of course, it took a few years and many losses to realize that the PRIOR 12 months earnings don't mean squat. The PE using prior 12 months earnings could be 1 - but if the future estimated earnings outlook was terrible, there's no reason for the stock to go up.
("But the 52 week high was 20, and this stock is at 10, a new low! And the PE is just 10!")
Spent a whole 7 years going from losses of 30% to break even, then 50% losses to break even, then 40% losses to break even. My third round-trip back to break even was around 2000. I was tempted to buy those insane internet stocks with infinite PE ratios (whichever few actually had earnings, much less any sales), but figured the market would crash just after I entered.
So I opted for the relative predictability of 7% returns with REITs and Muni ETFs.
Turned out to be an excellent choice, during the crash in 2000/2001, and continued gradual interest rate declines propping up fixed income and the real estate market.
As I finished school and started working, I next focused on emerging markets in around 2003, which also turned out to be a decent move.
But as my portfolio has grown, I greatly favor diversification. My top 5 largest positions are:
0.74% VWO
0.71% FBS-a (preferred stock of a local, privately-held bank, 8.15% coupon)
0.62% VB
0.60% HCLP (sand mine for fracking)
0.57% VSS
Having said that - from about 2005-2012, many times I would divert new money to sector bets, where I would typically find 1-3 companies in a sector that seemed to have decent valuations or prospects.
The downfall of being so widely diversified is that you are constantly on the prowl for new stocks to buy, although there seem to be more and more on my spreadsheet to buy, but just never enough money available! I try to limit new positions to about $3,500-$4,000 in size, unless it's a highly speculative position (like a biotech that has a 80%-90% chance of bankruptcy, or going to the moon), which would be about $2,000.
It's kind of fun having so many small positions in many companies that offer good value in different ways (dividend, dividend growth, left for dead by wallstreet, or an undiscovered up-and-commer).