Marner16 wrote: Charlie Munger, for those that don't know, has been the quiet half of the Buffet/Munger double-headed monster that has been running Berkshire Hathaway since 1962.
I'm posting Munger's investing philosopy because it is rare. I have been preaching the "focus on 3 to 5 stox that you know really well" for years and to say the least, it is not a popular strategy on these boards. I don't pretend that my strategy is better for everyone, but it does work for me.
For example, i have been searching unsuccessfully for a third company to add to my holdings in ENB and SU and finding myself frustrated with my inability to find a third, I bought into 3 US positions in market leaders on Friday (AMZN, TSLA, and WMT).
Munger observed that in the wealth management space “a lot of people think if they have 100 stocks they're investing more professionally than they are if they have four or five."
“I regard this as insanity. Absolute insanity,” Munger said.
"I think it's much easier to find five than it is to find 100," the 97-year-old investor argued. "I think the people who argue for all this diversification, by the way, I call it 'diworsification,' which I copied from somebody. And I’m way more comfortable owning two or three stocks which I think I know something about and where I think I have an advantage.”
I first learned the strategy from Tom Stanley and his Resolute Fund . You might want to check out his investing philosophy at https://www.resolutefunds.com/way.php as it makes for good reading.
Back in the day when I was a Bay St pup, Tom outperformed every fund manager on the street that we dealt with and I wanted to know why. He explained that you can only really focus on about 3 companies and for the rest, you do your best with the time you have. I quickly learned exactly what Tom meant because there are too many stox and too little time.
As I mentioned above, my strategy isn't for everyone. In fact, I could be dead wrong but it works for me. I find that the familiarity allows me to trade my favourites a bit which can really improve investment returns.