12-28-2021, 06:00 PM
(12-28-2021, 10:17 AM)Scooterd Wrote: "Diversification is only a free good if one cannot identify mispriced securities.
Once the concept of mispricing is introduced, diversifying away from undervalued securities reduces a portfolio’s expected return. Instead of more diversification always being better, diversification becomes a trade-off: it lowers the risk but at the cost of also lowering expected return. We don’t want to dilute our best ideas any more than is required to be prudent." - Bill Nygren
- Scoot
Bill Nygren is a sharp fellow. Early in my investor career I owned a couple of Oakmark funds and I always enjoyed his newsletters.