Capital With Conviction

There is an old line that diversification is protection against ignorance — sensible for those who do not know what they are doing, less so for those who do. It overstates the case, but it points at something true: the largest fortunes are rarely built by spreading bets thinly across everything.

Concentration is how conviction gets expressed in the language of capital. It requires knowing a domain deeply enough to bear being wrong in public, and temperamentally enough to hold a position through the stretch where the market disagrees with you.

"Anyone can hold a position when it is winning. Conviction is what you do in the drawdown."

This is not a licence for recklessness; the discipline of concentration is inseparable from the discipline of knowing your circle of competence and staying inside it. But the allocators who have shaped the most value over time tend to share a trait: when they finally understand something, they are willing to act on it as if they mean it.