Wednesday, January 16, 2019

Charlie Munger on diversification

From the 2008 Berkshire Hathaway Annual Meeting:
Students of America go to these elite business schools and law schools and they learn corporate finance the way it’s now taught and investment management the way it’s now taught.
And some of these people write articles in the newspaper and other places and they say, “Well, the whole secret of investment is diversification.” That’s the mantra. 
They’ve got it exactly back-ass-ward. The whole secret of investment is to find places where it’s safe and wise to non-diversify. It’s just that simple. 
Diversification is for the know-nothing investor; it’s not for the professional. 

Related previous posts:

Warren Buffett on Diversification - 1966

Warren Buffett on Diversification (1998)

Phil Fisher on diversification

More from Phil Fisher on diversification

Warren Buffett and Charlie Munger on portfolio concentration, and having the right temperament for it

Seth Klarman on position sizing (bottom paragraph)

Mohnish Pabrai on position sizing

Generalizing the Kelly Criterion

A quick diversification thought...

A few comments on the Berkshire Hathaway letter to shareholders