Due to the response on Twitter with this little story, I thought I’d share it along with a little more insight. Probably a good time to tell you that I’m not an especially smart guy at this as this is a common thread throughout my life and history – I’ve been really lucky, just a whole string of dumb luck and coincidences…
When I began as a rookie stockbroker in the late 1980’s I had the good fortune of having a seasoned investment professional (1960’s CFA) as a client. At one point I had to have a meeting with my client, my branch manager and the regional manager (of a top tier, national firm in Canada) due to the nature of the trades we were undertaking.
The conversation went something like:
“We appreciate your business Mr. X, and your reputation precedes you. We at X of course, as you know have the best research on the street and from an investment management point, of course, we stick to the diversification edict – we wouldn’t put all your eggs in one basket”…… ya/ya/ya for 20 min.
My client listened politely, then finally responded something like: “Thank you for that. All I have to say is that actually”,
“I believe that you have to put all your eggs in one basket – you just have to pick the right basket”.
Of course, his portfolio performed very well, 2X plus, in large cap, blue chip stocks! And at most had maybe 2 stock holdings or T-Bills if no stocks (plus a few dollars in a couple of my losing ideas).
Bottom line is that this concept stuck with me for all the years since and has served me very well in stock trading (not without several mistakes along the way). One of the most difficult things I had to deal with, with clients, was convincing them that T-Bills were ok after we sold, because I didn’t have a new good idea yet….