Berkshire Hathaway Inc (BRK.B)

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Buffett: May be the most dangerous man in finance.

"Warren Buffett and Charlie Munger became billionaires by betting the farm in size, then betting it again and again. They are the epitomy of investment expertise - educated and mentored by the best minds in the business. For investors of such gifts, a focused portfolio can make sense - indeed other famed investors like Bill O'Neil and Joel Greenblatt might even agree - but given that 99% of Buffett’s readership are armchair investors in professions other than finance a quote like is just plain dangerous serving to justify massively oversized betting in speculative stocks. The empirical evidence has proven that individual investors in general suffer from an array of financially crippling behavioural biases including over-confidence, loss aversion and herding - which can be summarised as forms of ‘general ignorance’. These biases lead to over-trading, under-diversification and poor market timing and have been shown to cost individual investors $160bn annually. Buffett should perhaps have rephrased that quote “You are most likely completely ignorant, so you’d best protect yourself and get diversified”. -

See more at: http://www.stockopedia.com/content/why-warren-buffett-may-be-the-most-dangerous-man-in-finance-63248