Reblog: Diversification Or Concentration? Quotes From Some Of The Best Investors


“There is one other rule you ought to keep in mind and that is to concentrate, and not only in the Zen sense. Sweet are the uses of diversity, but only if you want to end up in the middle of an average”  Adam Smith, the Money Game 1968

“Statistical analysis shows that security-specific risk is adequately diversified after 14 names in different industries, and the incremental benefit of each additional holding is negligible. We own 18-22 companies to allow us to be amply diversified but have the flexibility to overweight a name or own more than one business within an industry.” Mason Hawkins

“Empirical testing has proved beyond a reasonable doubt that the “riskiness” of a portfolio of 12-15 diverse companies is little greater than one loaded with a hundred or more” Frank Martin

“If you can identify six wonderful businesses, that is all the diversification you need. And you will make a lot of money. And I can guarantee that going into a seventh one instead of putting more money into your first one is gotta be a terrible mistake. Very few people have gotten rich on their seventh best idea. But a lot of people have gotten rich with their best idea. So I would say for anyone working with normal capital who really knows the businesses they have gone into, six is plenty, and I probably have half of what I like best. I don‘t diversify personally. ” Warren Buffett

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10 Peter Lynch quotes I try not to forget!


peter-lynch

Peter Lynch (born January 19, 1944) is an American businessman and stock investor. As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return,consistently more than doubling the S&P 500 market index and making it the best performing mutual fund in the world. During his tenure, assets under management increased from $18 million to $14 billion. He also co-authored a number of books and papers on investing and coined a number of well known mantras of modern individual investing strategies, such as Invest in what you know and ten bagger. Lynch is consistently described as a “legend” by the financial media for his performance record,and was called “legendary” by Jason Zweig in his 2003 update of Benjamin Graham‘s book, The Intelligent Investor.

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