The Eaves of Concentration and Diversification
Advice on meeting investment goals is often positioned as right or wrong. We believe both sides should be heard. Hence our motto: Audi Partem Alteram, “Hear the Other Side.” In the past, we wrote, “like the eaves on the roof of a house if your portfolio doesn’t contain ‘growth’ as well as ‘value’ you will eventually get wet.” In this letter, we examine why “prudent investing,” especially during times of renewed inflation, should include the eaves of both concentration for wealth creation and diversification for wealth conservation. Both are important and complementary. Furthermore, switching can be costly in time, taxes, and lost returns when one discovers each's shortcomings.
