To: lin luo who wrote (1142 ) 7/10/1998 5:05:00 PM From: Ming Read Replies (1) | Respond to
If he indeed is an idiot, then he is a most successful and wealthy one. But I didn't say that Warren Buffett was a big fan of diversification, but then again, he's never even put more than 25% of his money into any single investment, and Benjamin Graham, one of his most influential mentors, was a big fan of diversification. His attitude resembles that of a businessman more than that of an investor: find a few good and predictable businesses, and hold them for a good while. You may find this attitude ridiculous, as he can "sell along the way" and compound his wealth much faster. But with some 35 billion in assets, one can't exactly expect him to the flexibility to dispose all of his shares at once, as most small investors are capable of. His size literally dictates his strategy, and for his size, he's doing a helluva job. There isn't any other fund manager who has consistently outperformed this man with an equally immense portfolio, not even Peter Lynch at Fidelity. You may also think that he's stupid because he sticks with investments he can understand, and therefore has missed out on INTC and MSFT, but he isn't exactly a Tech Wiz with 2 ph.D.s, who is capable of understand new technology and their impacts on a company's bottom line. And even many of those with the Ph.D.s, and who work as Analysts and Senior Executives, have made forecasting mistakes. Many tech companies have gone by the wayside, further proof of the rapidly changing and often unpredictable nature of the technology sector. Even high-flyers like Silicon Graphics and Wang Labs have not been exempted from this trend. I could go on further about how he has missed out on other opportunities, but you get the point. He sticks to what he understands, and knows that he won't be wrong. And the fact is that he rarely is.
