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Warren Buffett wrote in Berkshire Hathaway’s 1998 annual report that, when Berkshire owns shares of a wonderful business, “our favorite holding period is forever.” I greatly admire Warren Buffett. He is one of the great investors of all time. But I strongly disagree that the shares of most wonderful businesses can be held forever because most wonderful businesses become less wonderful over time—and many eventually run into difficulties.
Warren Buffett wrote in Berkshire Hathaway’s 1998 annual report that, when Berkshire owns shares of a wonderful business, “our favorite holding period is forever.” I greatly admire Warren Buffett. He is one of the great investors of all time. But I strongly disagree that the shares of most wonderful businesses can be held forever because most wonderful businesses become less wonderful over time—and many eventually run into difficulties.
To achieve both concentration and diversity, a portfolio might consist of 15 to 25 holdings, with no individual security accounting for more than 12 percent of the value of the portfolio and no one industry accounting for more than 25 percent. The limits should be based on costs, not on market value, so that the portfolio manager is not forced to sell shares in a holding that has appreciated sharply, but that still remains attractive.
To achieve both concentration and diversity, a portfolio might consist of 15 to 25 holdings, with no individual security accounting for more than 12 percent of the value of the portfolio and no one industry accounting for more than 25 percent. The limits should be based on costs, not on market value, so that the portfolio manager is not forced to sell shares in a holding that has appreciated sharply, but that still remains attractive. How to create portfolio
