Thanks Mudit @Mudit.Kushalvardhan for your comments.
Mr Warren says we dont need to diversify if we understand the businesses very well. I am sure his intent is not to misguide. However, we can see that in his actual actions (partnership firm and Berkshire’s portfolio) he understands the risks so he never went with outsized positions as input, until unless it was a control situation or a rare occaision of Amex case.
In my personal context: all of the businesses/stocks I own I dont understand them in and out so I have 20+ stocks. Its better to say I dont know enough and plan that way.
@G_Sandeep Amex could not have been 40% of portfolio in 1963 as the partnership allowed up to 40% limit only from 1965. As per my estimates Amex was about 4-5 million bet on his net assets of 18 to 20 million so about 20-22% position. Later in year 3, i.e.1965 this bet went on to become 40% and thats why, I think, he amended the general rules of partenerhip in that year.
Also lets understand the rarity Warrent talks about:
As I mentioned earlier we hear from survivors only, lets look at the graveyard too. I would not have been writing here if, luckily, I was not able to sell my Arhisya stock (100% of my portfolio) just before it went down 80-90%. I did have Bajaj Finserv at 30% in 2017-2018 but it was a rather an outcome of its sheer perorfmance.
I understand that we may not reach on a conclusion for everyone as investing is personal and situational. Unfortunately thats the way investing is, there are no clear cut answers for everyone. I like to take path of lower resistance vs. a short cut with high resistance.
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