Becoming a millionaire is easy, especially when you’re 67, suffer from chronic back pain, and you’ve lost your significant other in a car crash. Crude? Well, c’est la vie. You can have a good job, save for 30 years, invest in index funds and lead a frugal life until you die, maybe before you had planned to.
Welcome to Substack! I discovered your writing via Amrita, who is a supportive fellow finance/wealth writer :-)!
Diversification is most investor professionals still do and recommend. As you said, they have access to data, investment universes, and tools to put together a more "optimized" and diversified portfolio. Hedge funds, as you may know, need to lower overall portfolio volatility but still make consistent performance, so it is hard to be as concentrated as say Buffett's portfolio, which is both concentrated (50% in Apple!) and has very long holding period. It is important for individual investors to research why they put on a stock/position and decide on how much to buy, else investor behaviour, which is sell where there is bloodbath. Now cash is also a wonderful alternative!
Hi Marianne! Thanks for your thoughtful comment. Diversification is indeed important for most investors, but lately I've been exploring this contrarian view that you can concentrate more and still do well. I will elaborate on it on my future posts and I'd love to read your feedback.
Last week we sent out a piece on position size that talked about how investing constantly in your best idea naturally leads to a healthy balance of concentration vs diversification.
There are a lot of genuinely great writers here who are starting out, so it's very helpful to build an interconnected, supportive community as a result.
Welcome to Substack! I discovered your writing via Amrita, who is a supportive fellow finance/wealth writer :-)!
Diversification is most investor professionals still do and recommend. As you said, they have access to data, investment universes, and tools to put together a more "optimized" and diversified portfolio. Hedge funds, as you may know, need to lower overall portfolio volatility but still make consistent performance, so it is hard to be as concentrated as say Buffett's portfolio, which is both concentrated (50% in Apple!) and has very long holding period. It is important for individual investors to research why they put on a stock/position and decide on how much to buy, else investor behaviour, which is sell where there is bloodbath. Now cash is also a wonderful alternative!
Hi Marianne! Thanks for your thoughtful comment. Diversification is indeed important for most investors, but lately I've been exploring this contrarian view that you can concentrate more and still do well. I will elaborate on it on my future posts and I'd love to read your feedback.
I shall look forward to your posts, and many thanks for subscribing too!
Interesting read. Thanks, Alejandro.
Last week we sent out a piece on position size that talked about how investing constantly in your best idea naturally leads to a healthy balance of concentration vs diversification.
https://specialsituationinvesting.substack.com/p/position-size#details
Thanks for the comment, guys!
I'll check out that piece, it seems quite similar to this one.
Looking forward to reading your posts.
Thank you! I’m amazed at how supportive the Substack community is being so far.
There are a lot of genuinely great writers here who are starting out, so it's very helpful to build an interconnected, supportive community as a result.
I completely agree with you.
Welcome to Substack.
Thanks a lot, Robert!