Buffett on Diversification, Risk, and Focus02 Sep 2016
Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing. I can’t be involved in 50 or 75 things. That’s a Noah’s Ark way of investing – you end up with a zoo that way. I like to put meaningful amounts of money in a few things.
We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it. In stating this opinion, we define risk, using dictionary terms, as ‘the possibility of loss or injury.’
Every professional wrestles with focus. You’re smart enough to do many things. But to achieve, to really achieve, you need to focus on a few key priorities.
Yeah, I need constant reminding here.