Customer Quote by Joel Greenblatt
““Somehow, when ownership interests are divided into shares that bounce around with Mr. Market’s moods, individuals and professionals start to think about and measure risk in strange ways. When short-term thinking and overly complicated statistics get involved, owning many companies that you know very little about starts to sound safer than owning stakes in five to eight companies that have good businesses, predictable futures, and bargain prices.””
About This Quote
Source Book: The Little Book of Value Investing, 2005
Dividing ownership into many small shares leads to over‑analysis and risk misperception; concentrating in a few solid businesses offers clearer risk and better value.
In simple terms: Too many small investments obscure risk; focus on a few strong ones.
Key Takeaway
Prioritize quality over quantity in investments.
Themes
investment
risk
concentration
value
Mood
analytical
thoughtful
cautious
Type
advice
educational
When to use this quote
- personal finance
- investment strategy
- financial planning
- stock analysis
Key Concepts
portfolio theory
behavioral finance
market psychology
Questions to Reflect On
- What balance of diversification and concentration suits your goals?
- How do you assess “good businesses”?
A Different Perspective
Diversification can protect against specific risks; over‑concentration may increase exposure.
![“We regard using [a stock's] volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return. Some great businesses have very volatile returns - for example, See's [a candy company owned by Berkshire] usually loses money in two…” quote by Charlie Munger](https://sms4smile.com/quotes/img-quotes/50c/charlie-munger-458_candy_we-regard-using-a-stock-s-volatility-as_1564654.jpg)
![“There's a clarity that comes with great ideas: You can [easily and simply] explain why something's a great business, how and why it's cheap, why it's cheap for temporary reasons and how, on a normal basis, it should be trading at a much higher level. You're never sitting there on the 40th page of…” quote by Joel Greenblatt](https://sms4smile.com/quotes/img-quotes/ffb/joel-greenblatt-21588_agonizing_there-s-a-clarity-that-comes-with-great_467148.jpg)
