While this may be a scary choice to make – concentrating your investments in a few stocks – that is what the young Buffett was doing in 1960s.
Sanborn, for instance, formed about 35% of Buffett’s portfolio in 1960. Plus it was a small company with an illiquid stock (just 105,000 shares outstanding).
Despite these attributes that can scare any investor, Buffett saw a great opportunity and invested heavily in Sanborn. He later did the same thing with See’s Candy in the 1970s.
Let’s me be clear here. I am not suggesting that you put 30-40% of your money in any one stock or investment. However, if you really believe in an idea, you may be willing to take it to around 10-15% of your portfolio.
Too many people over-diversify – allocating the same amount of money to their best ideas as to their worst ones. But then, as they say, “Concentrate to grow your wealth and diversify to preserve it.
So while you may buy a number of stocks for your portfolio, it pays in the long run to put most of your money in your best ideas.
http://www.safalniveshak.com/wit-wisdom-warren-part4/
calvintaneng
Yes. In Early Days I diversified in to 130 Counters. Hard to managed them; much less monitoring their prices. Too much diversification can lead to "diworsification".
Warren Buffet invested in SEE'S CANDY. SEE'S CANDY GAVE HIM OVER 20% Dividend yearly. He used the dividends as investment for other companies. A Chocolate Business Is Cash Generating, High In Profit Margin & Is Addictive.
Warren went on to buy Hershey, then Cadbury and finally Van Houten.
In Malaysia there is a little known chocolate company called NETWORK FOODS owned by PM Corp.
Having Sold Off All 130 Companies I am putting all my money into PM Corp & also MUI Berhad which own 70% of PM Corp.
2013-12-14 11:24