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 reproduced (the original was lost in the migration). My thinking on the subject hasn’t changed.

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There’s  a train of thought among people that concentration is the way to earn out-sized returns in investing. Buffett probably helped popularize this idea by focusing on his “twenty punch card ......