Top Highlights

• A goal is not always meant to be reached, it often serves simply as something to aim at.
• it moves in and out of fashion with rising and falling markets. When times are good, portfolio concentration is popular because it magnifies gains; when times are bad, it’s often abandoned—after the fact—because it magnifies volatility.
• One central feature of the discussion surrounding concentration is the Kelly Formula, which provides a mathematical framework for maximizing returns by calculating the position size for a given investment within a portfolio using probability (i.e., the chance of winning versus losing) and risk versus reward (i.e., the potential gain versus the pote...
• In other words, they attempt to find situations that offer a strong margin of safety where one’s principal is protected either by assets or by a strong franchise and an unlevered balance sheet.
• The singular trait that unites these investors, and separates this group from the herd of investors who try their luck on the stock market is temperament.