Customer Quote by Charlie Munger
“The idea of excessive diversification is madness. Wide diversification, which necessarily includes investment in mediocre businesses, only guarantees ordinary results.”
About This Quote
Source Speech: Annual Meeting of Berkshire Hathaway, 1995
Diversifying too broadly forces investment in average businesses, leading to average returns.
In simple terms: Too much diversification yields average results.
Key Takeaway
Focus on high‑quality assets.
Themes
investing
risk management
focus
Mood
analytical
pragmatic
Type
investment
advice
When to use this quote
- stock selection
- private equity
- venture capital
- asset allocation
Key Concepts
portfolio theory
concentration risk
quality investing
Questions to Reflect On
- What core businesses drive your portfolio?
- How do you balance risk and return?
A Different Perspective
Diversification can protect against specific losses.
![“They [Mc Donalds] take people and give them a first job, which enables them to get a second job. They do a very good job of educating troubled young people to be good citizens and they're probably more successful than charter schools.” quote by Charlie Munger](https://sms4smile.com/quotes/img-quotes/a55/charlie-munger-458_be-good_they-mc-donalds-take-people-and-give-the_41809.jpg)
![“It is way less certain to be a wonderful business in the future. The threat is alternative mediums of information. Every newspaper is scrambling to parlay their existing advantage into dominance on the Internet. But it is way less sure [that this will occur] than the certainty 20 years ago that…” quote by Charlie Munger](https://sms4smile.com/quotes/img-quotes/8d0/charlie-munger-458_advantage_it-is-way-less-certain-to-be-a-wonderful_59627.jpg)
