Well ! it is not quite correct. Buffet has historically made big outsized bets wrt his portfolio . For example in his early partnership he had invested about 35 % of his whole portfolio in one company Sanborn maps . In 1963 he invested 40% of his portfolio into American express after the salad oil scandal. His portfolio looks diversified because , he tries to hold on to good companies even if they are not doing good and doesn’t sell as long as he likes the company. But when he buys he buys a buys a big chunk of his investible corpus.
"The strategy we’ve adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. 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.”
-Warren buffet 1993
Subscribe To Our Free Newsletter |