Question

Warren Buffett, the billionaire investor and chairman/CEO of Berkshire Hathaway, stated that "diversification is protection against ignorance”. Do you agree with his statement? Why or Why not?

Answer 1

Yes, I agree with the statement.

" Diversification is protection against ignorance"

Billionaire Warren Buffett is generally considered the 20th century's most influential businessman and he is regularly ranked among the richest people in the world. Buffett is the president and CEO of Berkshire Hathaway, a global corporation holding company in the United States, which oversees and operates a variety of subsidiaries.

To show some of his core values, the billionaire uses two personal real estate investments: focus on what an investment can make, not its price; stick to what you know; and don't try to forecast what the economy or stock market will do.

Here are some insight from Buffett on investing:

1. Finding the right structure is really critical. You can find openings if you have the correct theory.
2. In order to generate adequate investment returns, you don't need to be an expert. But if you're not, you have to accept your limits and pursue a path thatis likely to work fairly well.
3. Keep it easy and don't let the fences swing.
4. React with a quick 'no' when promised quick income.
5. Investing's first rule is not to risk money.
6. The second rule is that the first rule should not be forgotten.
7. You should invest in companies so strong that they can be managed even by a fool, because someday a fool would.
8. If you haven't been able to buy a stock for ten years, don't even think for ten minutes about buying it.
9. If some are selfish and greedy, strive to be afraid only when others are afraid.
10. Price is what you're paying; value is what you are receiving. I like purchasing quality product when it is marked down, whether we're talking about socks or stocks.
11. Ignore the chatter, keep your expenses modest, and spend like you would in a farm in stocks.
12. Look out for the applause-producing investment activity; yawns typically welcome the big moves.

You have to have the right temperament, and you have to be able to disregard and actually look at the truth about what other people are doing. In assessing a company, the most important thing is to be able to identify-ones you can make an intelligent decision on and which ones are beyond your evaluation skill.