written by reader Asset Allocation parameters. What about Buffett?

By tomcookpsu, June 9, 2021

I’m a 75 yr old investor with a portfolio of 30 stocks. The only advise I’ve heard consistently over the last 50 years is DIVERSIFY. Usually the advise is to not have more than 5% or so in any one stock.
Then I see that Warren Buffett has 40% of his holdings in Apple.
Comments, please.

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Travis Johnson, Stock Gumshoe
June 9, 2021 5:17 pm

Buffett says that diversification is protection against ignorance, but makes little sense if you know what you’re doing.

I tend to over-diversify, partly because it helps me worry less and partly because I enjoy researching new investments. I rarely teach the level of certitude about an investment that Buffett seems to often enjoy, but it clearly works well for him.

And, of course,
I’m working with a lot more ignorance than he is.

My portfolio is pretty concentrated in my 10-15 favorite ideas most of the time, that’s usually well over half of the portfolio, but I typically have dozens of very small positions as well. I have different levels of anxiety for different kinds of stocks — I’m fine with Berkshire Hathaway being 10% of my portfolio, but would be very itchy if really expensive or momentum driven stocks crest that number (SHOP, for example).

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