Warren Buffett would agree with you, however his quote is:
“Diversification is protection against ignorance” “It makes little sense if you know what you are doing.”
Most of us would not know what we are doing when picking single company stocks, furthermore, we would not be willing to input the consequential amount of time required to properly value (and weight) those businesses.
People who know what they are doing should feel safe picking concentrated positions.
I would add that it’s psychologically easier to concentrate if you don’t need to worry about survival. If you can easily live off of two or three of your 10 or 20 bets regardless of how the rest of them do, yeah, fine, concentrate and enjoy your potentially higher returns and be immune against the higher volatility since you’ll live fine regardless.
BTW, despite Warren rooting for a Warren Buffett’s Punch Card Approach (make only 20 investments in your life and therefore be super selective about them) he has violated this himself over and over. I think the more affluent you are, the easier it is to only make a few bets.
Whatever suits your style and you’re able to stick with it through tough times IMO works best for you.
My thinking was that if your EM allocation is just 5% of the portfolio, then the 20 stocks would each be 0.25% of the portfolio, so you could just buy and forget about it and have your EM exposure.
If you have a portfolio of 5000, then you have an average of 0.001% in each company which seemed a bit silly to me.
Yep, that’s why I hold broad ETFs and BRK.B 
BRK.B is a company 
It was meant as a semi-serious joke! Another semi-serious point would be that I see BRK.B as a an index of sorts, and one which is not totally correlated to the world indices.
I also believe in Buffett’s method, and think it will only be improved once he passes.
My response is: if you can’t even pick a single company, then why can you pick a more complex instrument that contains a whole bunch of companies in it within a structure you probably don’t even fully understand?
Because you don’t pick.
I do understand ETFs and mutual funds (though I find mutual funds conceptually simpler and more attractive) - have spent a huge amount of time investigating how they worked before plugging my savings to date into them. I also pick companies from time to time, no brainers, but not with serious money and any profits get plugged into broad ETFs.
I know you know the answer, so I don’t get the point of the question, but I’ll bite anyway: I pick a more complex instrument because it removes the onus of having to pick stocks, essentially putting down my ego, being happy with a fair share of a regression to the mean performance which was passing me (and you and most people in fact) by until we decided to hop on the train, and looking at Socrates’s “All I know is I know nothing” quote.
By, ahem, picking Berkshire Hathaway, a multi sector holding company, you delegate the stockpicking to the master stockpickers with a many decades track record.
I can see this argument … (even though I don’t like BRK.B at their current valuation, given their ok but really only meh growth) … given the market has deemed it normal for them to have an about 20+ P/E over the past couple of decades.
I’d probably buy them at 15x P/E for my junior’s portfolio (growth oriented, no income required for the next several decades), but this has only happened for Berkshire about twice or so in the last 20 years.
Honestly, I am buying it because it feels less volatile than the overall world index and incorporates tens of companies, and because as I said above I trust Buffett’s method and am optimistic that it’ll go even better once they start spending the mountain of cash they are sitting on. It’s true that if I am not mistaken the last time BRK beat the S&P (other than in 2022) was…2005? It’s more of a defensive long-term stock for me.
But realistically, I don’t buy it with the intent to ever sell actually, while the ETFs are indeed earmarked for gradually selling eventually, I truly plan to hold BRK forever, passing on to my kids etc.
The stock barely registered Munger’s passing, it was probably priced in, Buffett’s death is not priced in, in my opinion. If the stock goes below -5% once Buffett passes I may back the truck to load up on more BRK.B.
Oh, sorry, I probably messaged things the wrong way.
Berkshire has beaten the S&P consistently over multiple decades. See their track record on page one in their most recent 2022 letter to their shareholders.
They’re a great company. Buy them whenever they’re fairly priced (I prefer more fairly than currently priced, though).
If their growth prospect was better (expected earnings growing at a better clip than 5% in 24 and 1% in 25), maybe buying them now would be ok for me. With that muted expected growth, however, I believe there’s better deals to be had right now (even as I love the company, just not the current price).
In even longer form:
What I meant to say is: if at this moment in time I was forced to make an investment I would not pick Berkshire for myself because
(a) I need cash flow in order to finance my lifesyte
(b) I don’t like having to sell from my portfolio to generate that cash flow especially when my needs determine the point in time of my selling and Mr. Market determines the price at which I have to sell
(c) they do not generate cash flow in the form of dividends which help immensely in generating cash flow for consumation while sparing me to sell the goose that lays the golden eggs.
YMMV, of course.
I finally have some time to share my “strategy” for 2024, my first full year after properly beginning to invest last year and joining this forum. It is rather simple. Since I have basically already reached my safety cushion I will:
The challenge for this year will be talking my SO into (a possible variation of) step 2. So far no luck as we started investing in 2021 and so our investments from there are still in the red (normal but harder to stomach for her), but at least that allows me to be more aggressive with my investments and she can work towards step 3 even if it’s not the most efficient way forward.
Oh yeah, I am aware, I was just referring to the fact that BRK hasn’t smashed the S&P500 for a pretty long time, now it’s trailing it by a bit while remaining less volatile. It’s ironic that of all people, Warren Buffett’s company is not exactly a value stock, isn’t it?
Re: dividends, I understand, I am in a different situation where I don’t want dividends. In my mind it’s not inconceivable that they may pay dividends once Buffett dies, he’s been consistently vocal about not being 100% against dividends if they don’t believe that they can generate more shareholder value by not paying them.
Yes. I’m just arguing for the sake of it. But of the 2 prominent stock pickers, one just died and the other may not last much longer either…
That said, I can see the appeal of BRK for tax efficiency. All return is from capital appreciation and not income.
I think, Warren Buffet has such big investments, that he also has quite some influence on the companies. This could also make a difference. If you think, a company that you invested 20’000 in, is doing shit, you cannot do anything about. But if you invested 500’000’000, you can probably change the CEO.
I just looked at the PorfolioAnalyst and im at 10.3% performance in CHF with monthly buys in VWCE (EUR) for the time period 02.01.2023-31.12.2023.
Can someone with monthly buys and similar portfolio composition share their yearly return in CHF for 2023? Because the benchmarks which I can select at IBKR all show massive higher performance somehow (blue line is my portfolio and green line is IWDA, MWR):
In comparison VWRL in CHF returned 22.29% according to yahoo finance:
Vanguard FTSE All-World UCITS ETF (VWRL.SW) Performance History - Yahoo Finance
The IBKR performance benchmarks are broken when the account base currency doesn’t match the currency of the benchmark. As far as I can tell, your account performance is correctly charted in your base currency but the benchmark is charted in the currency of the benchmark, which makes the comparison useless if the currencies differ.
This is wrong as well. The performance figures are in USD despite the quote being in CHF.
Check justETF instead: +10.75% in 2023 (https://www.justetf.com/en/etf-profile.html?isin=IE00B3RBWM25#performance).
Hold BTC!!! 
Been wondering, about to transfer 60% of my old 3A to FinPension (40% eaten by an insurance company), if it’s a good idea to go 1% cash, 3% Emerging, 7% CH and 89% Quality for the 3A going forward, given the bulk of my investments out of the 3A are in all-world.
I am currently 49% world ex-CH, 40% quality, 7% CH, 3% EM, 1% cash in FinPension but what’s the point if I am already all-in in all-world in my custody account?
Another question, the Boglehead/Vanguard 3 fund portfolio does include a fair bit of bonds, which I happily saw are also available in FinPension. While bonds do bring performance down, they also bring volatility down (see first pic).
Someone on the Bogle forum took the trouble to collate the big asset managers’ recommendations on stocks/bonds/age ratios, and came up with this table.
I understand these are US bonds they’re talking about (and CH bonds seem to be extremely low yield), but what’s the forum’s idea about adding a 10-20% part in bonds (or even MMF) in a 3A, and if it is positive then are there any suggestions within FinPension?
I really feel quite unsure: if the 3A should be chasing performance or stability given its contributions are capped. I feel more relaxed about keeping a lot more money in all-world and accepting market returns in a liquid account (ie custody account) than in a locked account (ie 3A).
