Nobody ever got rich through diversification

For this week's newsletter, we talked about how you only need one stock to change your life. And this week itself, we had our largest investment, Wise, demonstrating that.

Wise gained about 20% and given that it is about one quarter of our portfolio, this led to significant gains.

Imagine that our position was smaller. The gains would have been smaller.

Some of you might argue that it can work both ways.

That's true. That's why you have to be very choosy what you're buying. I added only one new stock, dLocal, to my portfolio in 2025.

In the case of Wise, the fundamentals of the company have been improving even with the falling stock prices. We had nothing to worry about.

Warren Buffett famously said you will have only 20 good ideas in your lifetime. That's true. Over his 60 years as CEO of Berkshire Hathaway, he had only a handful of great investments that made the difference, such as Coca Cola or Apple.

And he is not alone. All the billionaires got rich with a single business. Not diversifying into hundreds. They started something that they knew better than anyone else.

Even Ray Dalio who preaches diversification got rich through concentration. It's not his diversified portfolio that made him rich. But rather owning Bridgewater Associates and collecting fees from his clients. He got rich from one business, selling the dream of diversification.

If you're reading this, you probably need to have a diversified stock portfolio. Most people are better off this way. In the example we looked at in the newsletter, the person had 99% of his net worth in the S&P 500 in the beginning.

But you still need to focus on your work. Make as much money you can and invest it. That's where your concentration is. It's not in the market. It's in your skills. Your work!

Full post here:

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