Thursday, April 21, 2016

Warren Buffett on Diversification (1998)

This was from his 1998 lecture at the University of Florida, and was brought back to my attention through Jeremy Miller's excellent new book, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor:
"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 the seventh one instead of putting more money into your first one is [going to] be a terrible mistake. Very few people have gotten rich on their seventh 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 [would] probably have half of [it in] what I like best."
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Related previous post: A quick diversification thought...