A couple of days ago a friend sent me this passage in a book he was reading:

I think Buffett is very wise. And I agree with him, for the most part. But to play devil’s advocate:

One reason to add a 20th position would be humility regarding just how surprising the future can be and how badly you could be wrong about your top choice, let alone your top 10 choices.

I have a hard time looking at even my favorite choices and saying “I’m 90% sure this will go up.” I feel like the companies I am most excited about I feel more like “I’m 75% sure this will go up.”

If I find 20 companies that I’m anywhere between 70-75% sure they will be good investments, I’d rather spread it out between those 20 rather than dump it all into one.

Not to argue with Mr. Buffett, he has 60 years of experience on me 🤣

I guess another way to say it is “the standard deviation of my conviction distribution is small.”

I don’t have many outliers that I have vastly more conviction for.

When all your ideas are grouped together, I think it can make sense to spread the risk out.