Preview | Risk vs. Volatility & the Power of Concentration | Buffett's 1993 Investment Philosophy Masterclass
The 1993 letter delivers timeless wisdom about the nature of investment risk and the power of focusing on business fundamentals rather than market noise. Buffett's insights about volatility being the investor's friend and concentration reducing risk for knowledgeable investors remain as relevant today as ever.
Most importantly, this letter shows that successful investing isn't about predicting market movements or solving complex puzzles – it's about finding simple, understandable businesses with strong competitive positions and having the patience to let compounding work its magic.
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Risk vs. Volatility & the Power of Concentration | Buffett's 1993 Investment Philosophy Masterclass
In this episode, we are exploring Warren Buffett's 1993 letter to Berkshire Hathaway shareholders – a letter that delivers some of the most profound insights on investment risk, market volatility, and the power of concentrated investing ever written.
This letter is legendary for dismantling the academic theory that equates volatility with risk, introducing Ben Graham's "Mr. Market" concept to a broader audience, and delivering the most compelling case for concentration over diversification in investment literature. We also get the incredible Coca-Cola historical example that shows the power of patient capital.
We'll explore why volatility is actually the investor's friend, how to think about real business risk versus academic risk measures, why concentration can reduce rather than increase risk, and how competitive moats create long-term wealth. Plus, we'll hear about Mrs. B celebrating her 100th birthday by postponing her party so the store could stay open!
Most importantly, this letter provides a complete framework for thinking about investment risk that remains as relevant today as it was 30 years ago.
#WarrenBuffett, #CharlieMunger, #BerkshireHathaway, #InvestmentRisk, #Volatility, #Beta, #MrMarket, #BenGraham, #ConcentratedInvesting, #CompetitiveMoat, #CocaCola, #LongTermInvesting, #BusinessAnalysis, #InvestmentPhilosophy, #PatientCapital, #QualityBusiness, #CircleOfCompetence, #VotingMachine, #WeighingMachine, #RiskManagement, #ValueInvesting, #CapitalAllocation, #InvestmentWisdom, #WealthBuilding, #SmartMoney, #InvestorEducation, #FinancialLiteracy, #StockMarket, #InvestmentStrategy, #InvestmentLegends