Buffett's Views About Diversification

"Diversification is a protection against ignorance. It makes very little sense for those who know what they're doing."


If you don't understand what you are doing, you should broadly diversify your investments, with the hope that not all your eggs will go bad. If your investment adviser recommends broad diversification, he is really telling you that he doesn't know what he is doing and he wants to protect you from his ignorance.

Warren knows what he is doing, so he prefers to concentrate his investments on a few well-chosen eggs, and then he watches them like a hawk.

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