We make a series of investments, some will pan out and some won't.
Optimization tells us precisely how to diversify the portfolio, whether I should have 12% in semiconductors or 4% in biotech, etc., and it literally tells me how to diversify not only the industry groups but the stocks.
Most of the mutual fund investments I have are index funds, approximately 75%.
I have always been very diversified, so I have never suffered a catastrophic loss. I spread my money around the way a large institutional investor does. I use different brokerage firms. I manage some of my accounts myself.
It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.
I mean if you put all of your eggs in one basket, boy, and that thing blows up you've got a real problem.
If you are not making any mistakes, you are being excessively risk-averse. Investing involves risk, and that means you will occasionally be wrong. And although it is okay to be wrong, it is not okay to stay wrong.
Never underrate the importance of asset allocation.
Many follow a rule of thumb - no more than 5% in one stock. But that's not the entrepreneurial road to riches.
One way to mitigate our risk is to invest in companies with understandable business models.
I feel like investing in really solid stuff that I can control.
Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count … Good [investment] ideas should not be diversified away into meaningless oblivion.
I think that the first thing is you should have a strategic asset allocation mix that assumes that you don't know what the future is going to hold.
The reason we invest globally is because we think that's where a lot of the growth is happening: around the world.
I think that trying to invest through 535 people is a tough job, you know, and so I would give more latitude.
When you take smaller gambles, no one particular deal can be big enough to have a material adverse effect on the company.
We aren't going to let our first investment be the best.
Before starting my own investment funds, the only models I was aware of were those of Warren Buffett and Charlie Munger. Their models made a lot of sense to me, so I cloned them.
Small-company stocks, like any asset class, can get picked over from time to time, but there are fundamental reasons why diligently mining them with an eye for unrecognised value can get market-beating returns.
Forty percent of my portfolio is in the U.S. In the rest of the world, most of the places I invest in or invested in are Brazil, Russia, Germany with a little bit of Turkey, China, India, France and Israel sprinkled in there.
I'm making a case against how money managers are handling customers' money. The objective of the customer is not being met if the fund managers are diversifying their assets into hundreds of businesses. If they do this, they are typically performing close to the indexes. But that's not the way wealth is created.
The most common mistakes were investing in money market funds by people who were so scared at the prospect of managing their own funds that they picked the most conservative option, and their investments did not keep up with inflation. The second major mistake was being too heavily invested in their own company's stock, and buying when it was high and there was a lot of optimism about the company, and then having to sell it low when the company got in trouble.
We believe in constructing the portfolio so that we put our biggest amount of money in our highest-conviction idea, and then we view the other ideas relative to that.
I like not to feel that all my eggs are in one basket, or I get nervous.
We have a broad range of investments. Anyone who invests in emerging markets around the world has investments in Russia. This is a tiny portion of our portfolio.
