Warren Buffett & Charlie Munger: Diversification

Warren Buffett and Charlie Munger answer a question about diversification at the 1996 Berkshire Hathaway annual meeting.

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[gus.smedstad]

"Much of what is taught in modern corporate finance classes is twaddle." Gotta love Charlie Munger.

[nolanabell]

“Diversification is a protection against ignorance”

[Raymondjohn]

Didn't Charlie Munger and Warren Buffett invent the strategy of buying/investing when the market is low and also buying/investing when the market is high? As Warren Buffet said, he has seen this happen many times in his life. Not an investor. My wife and i never earned more than a middle class salary. We plan to get retired at 58 with a stock portfolio worth $4M. We have never sold so much as one share of stock...

[brianthongkhamthaeng]

"There are alot of Greek letters that make you feel like your in the big league" hahahahah RIP Modern Corporate Finance

[pnatgrendy]

I am always amazed at how smart these two are. Even though I watch them a lot I still finish videos shaking my head over how obvious what they are saying is but I didn't see it before.

[gooseholla]

"its crazy to own 50 stocks, or 40 stocks..."
Peter Lynch has entered the chat.

[brunomatias]

Diversification is a protection against ignorance. There’s nothing wrong about that.
If you don’t know how to value businesses, diversification is very important and valuable.

[williamc]

In fairness, Berkshire is a holding company. Buying Berkshire is the same as buying multiple businesses.

[arvincabugnason]

You don't diversify for diversification's sake. Diversification is an effect of analyzing a bunch of companies and listing down the best ones. Simply, you don't put a specific number of companies to invest, It just "happens" gradually as you analyze and find great companies. This is what Buffet/Munger means.

[CaptainPlanet]

At the time of this video recorded, he was 65 years old and worth a little over $10bill

[asgoodasold]

Useless to say, these guys are the best

[jurgenklopp]

Don't put all your eggs in one basket unless it's a good basket.

[jamlzs]

99.9999% of people who invest: Diversify, Diversify, Diversify..
Warren Buffett: 3 wonderful businesses is better than owning a handful. That's how fxxkin good he is..

[shivabreathes]

“The high priest would never have the edge over the lay people”

My word, these two are bursting bubbles in more ways than one! 🤣

[elements]

I've always thought of "diversification" as more a strategy for fund managers than retail investors.

[hondusspa]

Berkshire is diversified because of Berkshire's large cash flow. The company generates so much cash internally, it is impossible to reinvest it into the same companies that generate the cash. Geico is an example which generates so much cash but Berkshire can't keep putting money into Geico or Sea's Candy for example. The money comes out of so many businesses and Berkshire finds a way to reinvest it. Warren and Charlie are both strictly against a dividend so that seems like a completely last resort. Berkshire also maintains about 20% of its total assets in cash for insurance reasons. The company has more than 25 companies in the insurance business and were a catastrophe to hit, Berkshire is well capitalized to sustain the claims. Buffett has spoken about this at almost every annual meeting. I don't think Buffett wants to PERSONALLY be so diversified within Berkshire. His biggest personal holding we know of is Berkshire. He may own small amounts of other companies and he has said this but they are pretty insignificant to his overall net worth. Like you holding 1 share of Ford for example. It won't rock the boat in any way. But within Berkshire, they need to continually find where to put all this extra cash and that makes it for Berkshire to own stakes in a lot of publicly traded companies. Personally I've always wondered why Buffett didn't continue putting cash into Coca Cola which seems to be one of the businesses he loves the most. It seems to me acquiring more and more shares over the years and reinvesting the dividend even at higher prices may have been mighty lucrative for Berkshire but he may have his own reasons.

[BellyBoy]

The table cluttered with junk food... :D

[tinnguyen]

Thank you so much for sharing such useful great appreciated!

I am from a technology background. And I never invested in tech because the tech stocks are most often priced by people who don't understand technology.

[malcolmwatt]

"The high priest would never have an edge over the laypeople and that never sells well". Cash-rich they are now ready to pounce on the bankruptcies about to appear from the smile of the fading Cheshire cat.