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idea of diversification makes sense to a point if you don't know what you're doing and you want the standard result and not be embarrassed of course you're going to write a diversive way nobody's entitled to a lot of money for recognizing that because it's a truism it's like knowing that two and two equals four but the investment professionals think they're helping you by arranging a diversification an idiot could diversify a portfolio or a computer for that matter but the whole trick of the game is to have have a few times when you know that something is better than average fast only where you have that extra knowledge and then if you get just a few opportunities that's enough and what the hell is you carry on three Securities and JP Morgan Chase owns a hundred what's wrong with owning a few Securities well I know he says he lived in a growing town and you owned stock and three of the best Enterprises in the town isn't that Diversified enough the answer is of course it is they're all wonderful places and that Fortune's formula which got so famous which was a formula to tell people how much to bet on each transaction if you had an edge and of course the bigger your Edge the more close the transaction was to a certain winner the more you should bet and of course there's mathematics behind it but of course it's true it's perfectly possible by by only one thing because the opportunity is so great and such a Saints or only two or three so the whole idea of diversification when you're looking for excellence is totally ridiculous it doesn't work it gives you an impossible task what fun is it to do an impossible task over and over again I find it Agony I just who would want to do it and I don't see why my father had a client he was a lawyer in Omaha he had a client whose husband have a little Soap Company the guy died and my father sold the Soap Company this woman was one of the richest people in town in the middle of depression and what she had was a little Soap Company and a biggest mansion and my husband's neighborhood and he sold this old company she had a mansion in the best neighborhood and three hundred thousand dollars but three hundred thousand dollars in 1930 something was an incredible amount of money a little hamburger with a nickel a big hamburger was a dime and the all-you-can-eat Cafe and Omaha would feed you all you need to stay alive for two bits a day I mean 300 000.
well she didn't hire an investment counselors you didn't do anything she's a wonderful old woman she just took that and she divided it into five chunks and she bought five stocks I remember three of them because I probated her estate and one almost General Electric one was Dow one was Dupont and I forget the other two then she never changed those stocks she never paid any advisor she never did anything and she bought some admissible bonds she never spent her income and she bought some Minnesota bonds from time to time with the Animals by the time she died in the 50s she had a million and a half dollars no costs no expenses and I said how did you decide to do that she said well she said I thought electricity and chemistry were the coming things he just jumped it all in and sat on her ass I always liked that little woman my kind of a girl and but it's rare you stop to think about it think of all the expanse and palabber that she didn't have to listen to and All the Troubles she avoided zero costs but people don't realize because they're so mathematically illiterate is if you make five percent and pay two of it to your advisors you're not losing 40 percent of your future you're losing 90 because over a long period of time that little difference because of the 90 disadvantage to you so it's hugely important for somebody who's a long-term holder not to be paying a big annual toll out of the performance and of course there are a few Big Time advisors now are using indexation very heavily and of course they're prospering mightily and of course every time I get somebody it's just Agony for the rest of the investment counseling business it's a very serious problem I think these people were used to winning is the old-time value investors who are now just quitting the profession that's a very understandable thing to do I I regard it as more noble and staying in playing along with the denial it's an interesting problem you can see I'm trying not trying to make your morning I'm just trying to describe things the way they are
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