FUNDAMENTALS
INVESTING PRINCIPLES
An Alternative Approach to Diversification
s diversification really good advice? We’ve heard it preached religiously from financial advisors and
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institutions. However, Warren Buffett has said, “Diversi - fication is a protection against ignorance. [It] makes very little sense for those who know what they’re doing.” Take that traditional financial advice! Let’s explore this advice a bit more. Is he serious? Well, when Warren Buffett was only 20 years old, he followed his own advice, staking over half of his net worth at the time in a young company called “GEICO.” In the 1970s, Buffett significantly increased his stake even though the company was experiencing heavy losses. Clearly, this approach has paid off for him. He has done this again in other companies like Coca-Cola, Apple, and Kraft-Heinz. So, should we take this same approach in real estate investing? What can we learn from Buffett and this alter- native approach? Here are a couple investing principles that investors like Warren Buffett and others have inspired me to live by:
CAN YOU DIVERSIFY AND ALSO GO ALL-IN?
by Ellis Hammond
26 | think realty magazine :: october 2021
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