RE: Investment Diversification? "Diversification is for idiots!"
I think when most people give the "diversification" advice they do mean within an asset class, and even then they're usually talking about stocks. Although a real estate investor can diversify also by owning rentals in different areas like your friend is planning to. (Side note, if he hasn't already heard of Morriss Invest he might want to check them out... I haven't worked with them yet but I probably will be within the next year.)
I'd also argue Mark Cuban is pretty well diversified, owning multiple businesses and sports teams and Warren is famous for his stock portfolio but has also talked about owning farmland.
So yeah, I don't know what precipitated these well-diversified guys to say diversification is dumb... but I don't think it's a particularly bad idea to hedge your bets a little. I'm mostly in real estate though except for my 401k and a tiny bit I've gambled on cryptos (of which only Steem has paid off so far!)
Its a combination of diversifying within one asset class, or diversifying simply for the sake of being diversified (many times this leads people to invest in things they don't understand... WB loves sticking to things he understands), or diversifying businesses outside your skillset... which divides your focus and could lead to under-performance. I don't think they think diversification is bad across the board, but it requires a solid strategy and methodology.