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While it is good to have as much MF as possible, is there a magical value where it is most effective, keeping in mind diminishing returns (If any?)

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As you already mentioned "The more the merrier". But keep in mind that you should still be able to kill monsters. So if you go all-in to MF (almost) any enemy would probably be able to 1 shot you.

Concerning the diminishing return: yes, it exists but I don't know the exact formula to calculate it. Also, do not forget the Nephaelim Valor which you want to stack to level 5 which will give you additional 75% MF and 75% GF and bosses will drop at least 2 rares(1 rare in patch 1.03, but elite packs will also drop at least 1 rare in patch 1.03).

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    You can always swap your equipment, at least as a ranged solo character. Kill all Minions or Elites, except for one and drop his HP to 10% or lower then run away so you loose aggro, swap your gear and kill him. It is really bothersome to do but you have way better MF for a fragment of the price. – ayckoster Jun 14 '12 at 10:45
  • "As much as possible while still being effective at killing" - one way of doing it. "Swapping gear just before the kill" is the other way of doing it. Alternatively you could do it grouped with a couple doing the killing and a couple in the gear, but on average your MF will be lower doing this. – kalina Jun 14 '12 at 11:31
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    Pretty sure there's no diminishing returns. Magic find multiplies the % drop chance by your MF, then adds that onto the default drop chance. So if something has a 1% chance to drop, and you have 300% MF, it now has a 4% chance to drop. No diminishing returns there. – Mr Smooth Jun 14 '12 at 12:38
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    @novarg pretty sure there are no diminishing returns on MF – Halfwarr Jun 14 '12 at 13:46
  • @Halfwarr I'm inclined to agree on this, I do not believe that MF/GF are subject to DR – kalina Jun 14 '12 at 14:09

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