Diversification is protection against ignorance. It makes little sense if you know what you are doing.

As with everything about investing, understanding your time horizons and risk profile are essential to making sound investment decisions, and I highly recommend sticking true to your goals and personality.

I'd estimate a minimum risk profile of 3 is required to have long term success when buying individual stocks. It's not for everybody and it may not be for you. 

Buying index funds and diversifying your portfolio is considered the safe way to invest. It's very reliable, but also sometimes slow and inefficient. At some point, you may consider purchasing stock of an individual company. You're looking for companies that are trading below what you believe to be their 'real' or 'fair market value'.

In the event that one of these companies successfully executes on their mission, what typically follows shortly after is a rapid positive stock price movement. It helps to understand that all a stock price is, is an agreed upon number that buyers and sellers have both come to terms with when accepting the transfer of stock. If you think about what is required to make that price rise substantially, a lot of buyers are going to have to raise their perceived value of that stock. Which means the best investment opportunities are sometimes controversial at first, and only later do more people pile in once its deemed "safe".

When it comes to investing, if you only dollar cost average into the S&P 500, you will certainly be successful, but you'll never be extraordinary. In today's society, most people don't feel like they have 10, 20, 30 years to wait in order be able to afford a house. So, with added risk, you can select individual companies instead.

There's a popular investing concept called Disruptive Innovation. Disruptive innovation is the strategy to invest in tomorrow's companies today, by identifying which companies are best positioned to disrupt current incumbent companies. The general idea is that companies that stagnate and fail to innovate will get eaten by the better, more innovative competition over time. Even if the company is a giant whale that seems like it's here to stay forever, if they don't innovate, eventually enough sharks will take a bite out of it to the point where its no longer the biggest fish.