CONCENTRATION VS DIVERSIFICATION – LESSONS FROM A FUND MANAGER WHO BLEW UP

CONCENTRATION VS DIVERSIFICATION – LESSONS FROM A FUND MANAGER WHO BLEW UP via The Asia Report

I read a story on Kiplinger about a fund manager who closed up shop after fifteen years managing money due to his poor performance in the last two years.

He pretty much sums up the problem with concentration:

Magnifying the problem was my decision to put too much money into my favorite ideas.

I totally bought into the notion that it was foolish to invest in my 60th-best idea.

What I overlooked was how bad things could get if I was wrong about my second-best, third-best and fifth-best ideas at the same time.

This brings me back to one of my old post which I’ve...