Importance Of Focus

valueinvesting
investing

#1

Focusing on your best ideas is absolutely critical if you want to be really successful at investing…

Buffett has been known to concentrate on enormous positions…

In 2008 Buffett said:

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.

And in 1998, Buffett said:

I can guarantee that going into the seventh one instead of putting more money into your first one is…a terrible mistake. Very few people have gotten rich on their seventh best idea. So I would say for anyone working with normal capital who really knows the businesses they have gone into, six is plenty, and…probably have half…(in) what I like best.

In 1998, Buffett said he would normally have six stocks in total and 50% in his number one idea. Or six positions divided by 100 gives you an allocation of roughly 16.67%…

In another quotes, Buffett says it’s best to have 16% overall and 25-50% in your best idea…

Buffett always allocated money into bigger positions when he was running his partnership overall. He normally allocated something like 20% into each idea. This normally involved investing in a company, pushing from a reform there and reaping the benefits!

Buffet’s partner Buffett even decided that he could live with owning only three stocks in total…

More on this idea: here:

https://www.gurufocus.com/news/572659/how-warren-buffett-squeezes-so-much-value-out-of-so-few-stock-ideas


#2

Nice one, very interesting!