Don't fall in love with a coin, has probably been best advice i have heard. That means that if you have strong emotional bond with your bag when it's going up, you don't see what's happening, because you stay convinced that it's the next ETH or something.
It is when a person starts confusing their luck for skill. The coin that they invested in pumped a lot, and to them this must mean that it is going to be a big thing. Of course the things don't work that way and most of the time it is just pure luck and timing, most of these coins die later on.
And when you sell, sell slowly and never sell everything, because there's a tiniest change that bag will moon in the future, and you might want to have bag that you forgot even existed. That once happened to me with one coin that's already dead by now.
This is rare and good advice. I would say keeping a healthy 10% of whatever shitcoin you had is good enough. If it goes to zero, this loss is not important. However, if it recovers and becomes relevant again this 10% will be worth more than the other 90% that you sold before.
It's still a good strategy after all. It has never gone wrong to put most that they have to BTC and if they want to really diversify then it's holding ETH that should come next. But little did they know, if they are going to diversify even more, the balance wil be gone on that portfolio. They're making a huge mistake and you're right about that. There are more altcoins now and the choice is becoming harder for them because they're too confused of what altcoins that they have to diversify with. But we say, they don't have to diversify a lot and go with the traditional holding of these known cryptos in the market and so that they don't have to think a lot about it.
Diversification is a good strategy when used correctly, but most people apply it wrong and that is why the results are terrible. Bitcoin is the diversification from most things you may have already. If you can find one or two more great alternatives then sure diversify reasonably. But if you don't have great alternatives, don't force diversification thinking that you are a smart ass. This is what leads to losses.