03-31-2015, 12:26 PM
(This post was last modified: 03-31-2015, 12:27 PM by Roadmap2Retire.)
Welcome to DGForum D&T.
I think what Buffett means by that you can build your wealth and grow your fortune by focusing on a few companies. But you have to consider the risk involved. Yes, if there is a fantastic opportunity - adn you could put all your energy, effort and money into building a company - you can get rich, but it comes with immense risks. In the public market however, with limited funds and the need to avoid excessive risk, its not a good idea to put all your eggs in one basket. Studies have shown that the unique risk can be mitigated considerably by owning as few as 12 stocks. See this article.
I hold about 25 companies myself and find that its quite manageable.
I think what Buffett means by that you can build your wealth and grow your fortune by focusing on a few companies. But you have to consider the risk involved. Yes, if there is a fantastic opportunity - adn you could put all your energy, effort and money into building a company - you can get rich, but it comes with immense risks. In the public market however, with limited funds and the need to avoid excessive risk, its not a good idea to put all your eggs in one basket. Studies have shown that the unique risk can be mitigated considerably by owning as few as 12 stocks. See this article.
I hold about 25 companies myself and find that its quite manageable.