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In this video, we're going to take a look at Warren Buffet's unconventional investing advice: you only need ONE stock.

Warren Buffett is living proof that you can build a fortune with one single stock. This is rarely said out-loud because conventional financial wisdom stresses the importance of diversification. Diversification is important, and critical for most investors, but if we analyze the greatest investor's careers, it's clear that a few decisions make the most impact.

Key Takeaways:

1️⃣ Building a fortune often doesn't come from a diverse portfolio, but rather from identifying a singular, wonderful business that can be purchased at a reasonable price.

2️⃣ A 'wonderful' business is one you understand, has a durable competitive advantage, high-quality management, high integrity, and is reasonably priced, giving you a margin of safety.

3️⃣ Low expectation businesses can potentially provide huge opportunities. This means great businesses that are currently overlooked by the majority.

4️⃣ Small-cap stocks and businesses based in China might provide opportunities for investors willing to look beyond conventional avenues.

Warren Buffett's Statement Context from the 1996 Berkshire Hathaway Meeting:
You know, we think diversification is — as practiced generally — makes very little sense for anyone that knows what they’re doing. Diversification is a protection against ignorance.
I mean, if you want to make sure — (laughter) — that nothing bad happens to you relative to the market, you own everything. There’s nothing wrong with that. I mean, that is a perfectly sound approach for somebody who does not feel they know how to analyze businesses. If you know how to analyze businesses and value businesses, it’s crazy to own 50 stocks or 40 stocks or 30 stocks, probably, because there aren’t that many wonderful businesses that are understandable to a single human being, in all likelihood.
And to have some super-wonderful business and then put money in number 30 or 35 on your list of attractiveness and forego putting more money into number one, just strikes Charlie and me as madness. And it’s conventional practice, and it may — you know, if you all you have to achieve is average, it may preserve your job. But it’s a confession, in our view, that you don’t really understand the businesses that you own. You know, I base — on a personal portfolio basis — you know, I own one stock. But it’s a business I know. And it leaves me very comfortable. (Laughter) So you know, do I need to own 28 stocks, you know, to have proper diversification, you know? It’d be nonsense. And within Berkshire, I could pick out three of our businesses. And I would be very happy if they were the only businesses we owned, and I had all my money in Berkshire. Now, I love it — the fact that we can find more than that, and that we keep adding to it. But three wonderful businesses is more than you need in this life to do very well. And the average person isn’t going to run into that. I mean, if you look at how the fortunes were built in this country, they weren’t built out of a portfolio of 50 companies. They were built by someone who identified with a wonderful business. Coca-Cola’s a great example. A lot of fortunes have been built on that. And there aren’t 50 Coca-Colas. You know, there aren’t 20. If there were, it’d be fine. We could all go out and diversify like crazy among that group and get results that would be equal to owning the really wonderful one. But you’re not going to find it. And the truth is, you don’t need it. I mean, if you had — a really wonderful business is very well protected against the vicissitudes of the economy over time and the competition. I mean, you know, we’re talking about businesses that are resistant to effective competition. And three of those will be better than 100 average businesses. And they’ll be safer, incidentally. I mean, there is less risk in owning three easy-to-identify, wonderful businesses than there is in owning 50 well-known, big businesses. And it’s amazing what has been taught, over the years, in finance classes about that. But I can assure you that I would rather pick — if I had to bet the next 30 years on the fortunes of my family that would be dependent upon the income from a given group of businesses, I would rather pick three businesses from those we own than own a diversified group of 50.

⚠️ Disclaimer: This podcast is for informational purposes only and is not investment advice.

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