Why Concentrated Portfolios Beat Diversification
Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated PortfolioShow Notes
Lucas and Luna examine the mathematics of portfolio concentration, arguing that true diversification is a tax on returns rather than a shield against risk. They analyze why most investors hold too many positions and how focusing on high-conviction ideas—like Berkshire Hathaway's recent software investment or Apple's consistent execution—can outperform broad market averages over time. The episode challenges the passive investing dogma by exploring the cognitive load of research versus the emotional toll of volatility in a concentrated book.
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