I have two views on diversification, says Warren Buffett. "If you’re a professional and have confidence, then I would advocate lots of concentration. For everyone else … participate in total diversification. But if it’s your game, diversification doesn’t make sense. It’s crazy to put money in your twentieth choice rather than your first choice. Charlie and I operated mostly with five positions. If I were running 50-100-200-million, I would have 80% in five positions, with 25% for the largest. There were times I would have gone up to 75%. If it’s your game and you really know your business, you can load up." And, in a similar vein, from Joshua Brown at The Reformed Broker: "Stocks, bonds, real estate, cash, humility … you can make a case for all sorts of stuff in a portfolio. But you cannot make a case that they are necessary. "The evidence suggests that diversifying into other asset classes or strategies can enhance returns during some periods of time or that they can change the amo...
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