Is diversification beyond S&P500 (e.g. other countries, asset classes) really necessary for long term investing? In the process of aiming to minimize losses, aren’t we actually cutting returns?

We should decrease risk. not so well known that according to CS research Sweden stock market over long periods and inflation adjusted performed better than the U.S. market

Buying Stocks is essentially Partial Business Ownership. Beating the market means owning quality companies that are extremely well managed and able to earn more money on limited capital.

If you cant understand complicated metric ratios, then just look at any Hawker store in Singapore market lor. What defines a Quality Hawker Stall?

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Customer Queue Until No day No night

Hawker Cook Consistently and Maintain Quality

Customer Retention High

Manage Raw materials supply chain well for Economy of Scale

Entire Market Only this stall sell this Product (High Margins)

Stall Owner Debt Much lower than Cash

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So on and forth....

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The purpose of diversification is to reduce risk, not to maximize returns. If you really know 100 percent what will happen in the future (only God knows), just go all in. Wall street news and articles are tuned towards returns.

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It also doesn't take into account the investor personal profile (risk, asset, time, competencies)

It is a trade off between returns and risk, the purpose of diversification is risk management, not returns enhancement.