August 10, 2015

Tren Griffin is the senior director of strategy at Microsoft corp. during the day, but in his spare time he transforms into a voracious writer and reader about business and investing. As of September he will be publishing a new book focusing on the ideas and practices of Berkshire Hathaway’s very own Charlie Munger, the right-hand man to Warren Buffett.
In one of the chapters Munger, talks about the difference between a “know-nothing” investor and “know-something” investor. Munger also points out that despite the fact that more than 90% of investors are “know-nothing investors,” way more than 10% will conclude “I’m in the 10%.” As a “know-something” investor, Munger is what he calls a “focused investor”—buying very few stocks relative to the size of his portfolio. In other words, he does not follow wide diversification. In fact, he believes that for a “know-something” investor, portfolio concentration decreases risk if it raises both the intensity with which an investor thinks about a business and the level of comfort he or she has with its economic characteristics. It is important to point out that Munger defines “risk” as a permanent loss of capital and not volatility, as it is often defined in today’s markets.

Read more at this link: http://www.wsj.com/articles/channeling-charlie-munger-a-chat-with-tren-griffin-1439172121?mod=yahoo_hs