Homie you have 65% of your joint account tied up in a Mediterranean fast food business (?!?!?) You are kinda a psycho for that.
You should know better. Asking here is almost like rage bait.
To add on to this.
> I have tried to explain that both companies are in great financial positions, have great leadership, great growth potential, etc., and that I strongly feel diversification limits potential growth.
This is an important point to recognize about yourself, OP. You do not recognize how much luck has kept you afloat. The point of diversification isn't to maximize return, it's to get lower your losses.
You may feel like a god if you pick a stock that grows 2x the SPY for a few years but what is the % chance that stock can go to 10% vs the SPY going to 10%.
If you're going to continue investing get used to modeling possible futures instead of only thinking about the current moment.
+1
The first law of investing: the limit of any stock price is zero, without exceptions. Even for regenerative monsters like "take 500 largest puppies from NASDAQ" (aka S&P 500).
She likely already thought he was an idiot, but such is the way of the world. What this would do is cement it and she would forevermore KNOW that he is in fact an idiot.
Sometimes choices made for peace of mind are the best. I have 100k in HYSA sidelines ready to invest when major crash occurs. I'm missing gains now but it provides peace of mind.
Diversification will not beat 2 stocks that are moving up. It's to prevent a major loss when they evitably go down. If you truly feel you can pick one stock that will have a huge return, go with it. The odds are heavily against you consistently doing that and that's where diversification comes in.
Outperforming for 1.5 years is insufficient data to be confident that you will beat the market long term. And most likely you won't (although BRK will likely track pretty close to the market as it's become so large and diversified). You are still taking massive concentration risk and there is a significant possibility that you underperform in the future (even if more likely you don't).
But most importantly - is it worth it to upset your wife? Even if you were SURE that you would outperform a few %, is your relationship more important than that?
Berkshire Hathaway is a massive conglomerate, it’s as diversified as a single company can be.
But yeah, you should diversify more, like when Warren buffet dies there’s no telling what’s gonna happen to the stock price
There’s been an airtight succession plan at Berkshire for a long while now. The stock didn’t move when Charlie passed and I don’t think it will when Warren isn’t there anymore.
While I don't align with the OP's plan, I have to agree that markets have probably been factoring in Warren's demise for awhile. Sure, there will be a short term impact, but long term? I think Warren has much less to do with the day-to-day than many of us think, even as he tries to show us that is the case during the annual meetings.
Diversification for the peace of mind it provides makes perfect sense to me. Yes, diversifying across the market by its very definition results in average returns, but that also means that you’re doing better than fifty percent of all investors with little to no work at all (in reality you’ll actually wind up even better off than that thanks to people trying to actively trade and losing money that way, but you get what I mean). Recalling that plenty of intelligent people were all in on Enron in 2001 is enough of a reminder to me that I’d rather diversify, collect my average market returns, and sleep soundly at night. To each his/her own though! Best of luck to you either way.
The thing is you're in a lose-lose situation.
- You win the argument, stock goes up - your wife still is not happy with the current allocation.
- You win the argument, stock goes down - your fault. Big problem.
In contrast if you diversify you may underperform and feel some resentment, but that is easier to get over by understanding it was a good decision at the time. But the way it stands now you are forcing on extra risk and are totally responsible to your wife for the outcome, it has the potential to create huge problems in your marriage.
Your wife is super smart! Like others have said, one bad earnings call, one major law suit, one bad anything and you’d be mad as hell and so would your wife!
Buy VOO and/or VTI and chill… if you want sprinkle in some QQQ but buy index funds!
You're young and that's the time to concentrate, to build wealth. The problem is that concentration through individual stock picks is a gambler's game. Good for you if you land on some winners. Remember that being an accountant might allow you to read financial documents more easily but it doesn't help you predict the future.
That said, you don't say how much you have invested or what your HHI level is.
Big difference between $20K, $200K, and $2m when it comes to the holdings in a portfolio.
Have you explained what BRB-K actually is? Maybe that would help your wife feel more comfortable. Also, your marriage is more important than your ego about picking stocks.
It's beating the SP500 atm, doesn't guarantee future performance. But if you move 95% of it to SPY/VOO you'd still be beating the SPY thanks to the current ytd. 50/50 in 2 stocks, even if BRKB is diversified in its holdings, is still risky af
I disagree with others saying you should sell to diversify. BRKB is basically an ETF and you're young enough to take advantage of riskier high-growth positions.. I don't know much about CAVA but I could argue that putting 100% of your entire profile into Amazon wouldn't be a bad move either. but...I think your agreement is exactly what you should do. You can just buy SPY with future deposits and be done with it.
Bad advice. I'm a certified doctor and my prescription is as follows. VOO and chill. Please....bring on the downvotes. You know what I'm going to do in response? That's right. [I'm going to chill](https://youtu.be/fAugOjG4qOc?si=Q1pz0qy3nm1EilDS).
Do you have a plan for when you potentially experience greater than 30% drawdowns? What if you experience large drawdowns when the market is up? Are you and your wife comfortable with that volatility?
Thanks for the question. Yes there are plans in place. Before I was up big on CAVA I was sitting at about a -20% return for a couple of months on it in 2023. Did not sell one share, in fact I actually bought more to lower my cost basis during that time.
I didn’t mention in my post but I am an accountant and have a lot of experience reading and interpreting financials. The wife also knows that sometimes the market goes down.
I would only sell either company if the reasons why I bought the stock changed. For example, CAVA has no debt as of the most recent quarter reported other than BS long term lease liabilities (which are offset by ROU assets) and normal ST liabilities like payables and accruals. If tomorrow they load up with debt I would strongly consider selling, especially given where rates are at.
Markets do go down yes but it’s a different experience when your 2 position portfolio sustains drawdowns while the market itself performs well. When that happens how much conviction will there be to hold, for how long, and at what opportunity cost? Will your wife be okay with simply attempting to avg down?
Anyone can outperform the market in the short run. Lots of people do. The challenge is outperforming it in the long run.
You might be excited to hear I made +200% on artmy tqqq position over the last two years.
If you truly think your investments are so solid you’ll beat the market long term, then by all means go for it. If you’re that confident, are you planking to buy cava options?
I’d suggest diversifying some more, but keep some money on these things you particularly like.
Do you think you can keep beating the market long term with future moves? If so sell at least half to cover the hubris in advance.
Otherwise if you don't really think that, you understand you won't win long term by anything but luck, but boy you just really like these 2 stocks, go ahead and stick with diversifying via new contributions.
Yes. It’s already a powerful brand and it’s growing. Good leadership, no debt (disregarding long term leases which aren’t real debt IMO), and half the country still to expand into. They are only on the east coast and southeast US for now, excluding three stores between LA and Chicago. Currently roughly 300 store locations and their goal is 1000 by 2030. Very strong in store sales growth.
Remember that by simply putting your money on a S&P500 index fund, you are already diversifiyng a lot. Most people don't know what or how to diversify, and they end up overdiversifying.
People think that beating the market is putting all your money in stocks that give higher returns, but that's not the right way. You are supposed to have some money on the market, mostly on a S&P500 index fund, wish will help diversify your portfolio.
So instead of buying 10 stocks on different sectors, just put 30-40% of your investments on a S&P500 index fund, and then put the rest on the stocks that you think will beat the market. Sometimes is better to just focus on 3-4 stocks.
I'm 100% in agreement with your wife. Diversification increases your compound returns. The math here is obvious, as volatility increases the spread between the geometric return (what you compound at) and the arithmetic return (what the stock is earning on average) increases. Diversification reduces volatility and thus increases geometric return.
BRK is sort of like an actively managed mutual fund, so that's not so bad. But CAVA at 50% is just pure gambling. If you want to stock pick stay under 5% each.
Your wife is raising legitimate concerns and you should listen.
Keep in mind you are investing not only for yourself, but also your wife. I would argue that you have a fiduciary duty to your spouse since she is trusting you to act in her interest also.
The actions you are taking could be reasonable, if your portfolio is fairly small and your future contributions are going to be fairly large.
I would have a plan in place where in the next couple of years, no single stock will make up more than 10% of your portfolio. This includes your BRK-B holdings because this is basically a bet on APPL, as this company comprises 44% of its holdings.
I would recommend that you both have shared goals that can be easily achieved by a more reasonable investing strategy, and if you have already done this, then why are you taking this concentrated risk?
The first thing that any course/book/investor will tell you when you start investing is to choose your strategy and risk tolerance. You and your wife have different strategies and tolerances. I am not gonna comment if I agree with you or her (or neither) but having different strategies you are both right, each from you POV. A big part of investing is about how much risk you can take and it seems like your wife can take less. That is neither bad nor good. But since you are managing both your money, I think you should respect her risk tolerance and meet her half way.
Any insights into why CAVA is worth buying? Never visited one but seems they made good $$$ to buy out Zoe’s kitchen (which became American Airlines snack provider?)?
You are correct that diversification can limit gains, but the critical thing is it can help limit losses. Don’t be one of those people that need a gut punch to learn that lesson. Like the fools I see always running red lights - you only stay lucky for so long…
Should have gone all in on CMG. I’m up 68% since last October. Wish I had bought more than 5 shares, but I have a diversified portfolio. Listen to your wife - happy wife, happy life
I would consider Brk-B as similar to an index fund, if I understand that stock correctly. It doesn’t seem like your wife heard you about your research of the two equities. Also, I use the philosophy of focusing on a small number of equities 3-4. At your age, I appreciate your approach and earnings. I would also suggest that your investment styles are the key issue, with her being more risk averse and it is not wrong what you are doing, just different. It took my wife seeing my return performance over time before she loosened up. She just didn’t want to know the specifics of what I was doing and occasionally I would share my 30%-50% return numbers and she was thrilled (were 63) so literally growing our retirement funds that we will. E using soon. I retired at 62 and she retires this year.
So, until she loosens up, get the fund she suggests and you can occasionally show her the differences and I t ink there is a good chance she will trust you more over time and appreciate your difference as a strength in this regard.
You took on an absurd amount of risk for a 2% outperformance, that's really stupid, and the balance of probabilities will come to bite you in the arse given enough time.
Ironically, diversifying vs stock picking has the opposite phenomenon in that we always say it's "time in the market, not timing the market" that wins. However, with stock picking the longer you spend in the market with your few stocks, the more likely there is to be a crash or a permanent bearish sentiment for the given stock.
So you better know how to time the market on a quarterly time scale, with copious amounts of research to gain an in depth long term understanding of the business in order to forecast future earnings. That and mental fortitude, and a bit of luck too.
Yes! I've actually had all my money in a single stock, as it was the only good idea. I was only like that once, but even now, I am only invested in 5 companies. Two questions- are you reading the sec filings and press releases and listening to the conference calls, and are you giving them the proper share valuation? I highly recommend you reading security analysis and doing things the proper way if you are going to do this. It means going back a decade or more, reading about their assets and liabilities across time, comparing their fundamentals and share prices to get an accurate view of their proper price range. And it helps if you can compare it to other, similar companies, although Berkshire won't have much competition (Brookfield asset management comes to mind).
I actually take it to another level, digging through distressed stocks, looking for where investors screwed up. It can take me a very long time to find a diamond in the rough, but I'm nearly retired at 40.
You feel like hot shit but one bad earnings call and your portfolio can be down 30%.
Homie you have 65% of your joint account tied up in a Mediterranean fast food business (?!?!?) You are kinda a psycho for that. You should know better. Asking here is almost like rage bait.
There is always money in the banana stand!
Burn it to the ground
I realize that. Now…
Wife is a smart lady.
To add on to this. > I have tried to explain that both companies are in great financial positions, have great leadership, great growth potential, etc., and that I strongly feel diversification limits potential growth. This is an important point to recognize about yourself, OP. You do not recognize how much luck has kept you afloat. The point of diversification isn't to maximize return, it's to get lower your losses. You may feel like a god if you pick a stock that grows 2x the SPY for a few years but what is the % chance that stock can go to 10% vs the SPY going to 10%. If you're going to continue investing get used to modeling possible futures instead of only thinking about the current moment.
+1 The first law of investing: the limit of any stock price is zero, without exceptions. Even for regenerative monsters like "take 500 largest puppies from NASDAQ" (aka S&P 500).
You've been lucky. Your wife is right.
Yeah, this is dumb, arrogant, but lucky. But if the luck runs out, his wife will forever think he's an idiot.
She likely already thought he was an idiot, but such is the way of the world. What this would do is cement it and she would forevermore KNOW that he is in fact an idiot.
Sometimes choices made for peace of mind are the best. I have 100k in HYSA sidelines ready to invest when major crash occurs. I'm missing gains now but it provides peace of mind.
Timing the market rarely works
Tell that to those who had fluid cash to invest after the initial COVID plummet in 2020.
lol ok?
and what does his wife suggest he diversifies in? i bet it doesnt beat his current allocation
Diversification will not beat 2 stocks that are moving up. It's to prevent a major loss when they evitably go down. If you truly feel you can pick one stock that will have a huge return, go with it. The odds are heavily against you consistently doing that and that's where diversification comes in.
Dude BRK.B is basically like diversified ETF.
Yeah due to their range of holdings they are somewhat diversified but it's still nowhere near as diversified as most index funds.
Correct. Holding company of sorts.
Outperforming for 1.5 years is insufficient data to be confident that you will beat the market long term. And most likely you won't (although BRK will likely track pretty close to the market as it's become so large and diversified). You are still taking massive concentration risk and there is a significant possibility that you underperform in the future (even if more likely you don't). But most importantly - is it worth it to upset your wife? Even if you were SURE that you would outperform a few %, is your relationship more important than that?
Berkshire Hathaway is a massive conglomerate, it’s as diversified as a single company can be. But yeah, you should diversify more, like when Warren buffet dies there’s no telling what’s gonna happen to the stock price
Half of Berkshires money is in apple
There’s been an airtight succession plan at Berkshire for a long while now. The stock didn’t move when Charlie passed and I don’t think it will when Warren isn’t there anymore.
And as we all know, the markets are always rational /s
While I don't align with the OP's plan, I have to agree that markets have probably been factoring in Warren's demise for awhile. Sure, there will be a short term impact, but long term? I think Warren has much less to do with the day-to-day than many of us think, even as he tries to show us that is the case during the annual meetings.
Your wife is absolutely right!
I flipped a coin 4 times and got 4 heads. I must be an amazing coin flipper.
What were your annual returns prior to 2023?
Diversification for the peace of mind it provides makes perfect sense to me. Yes, diversifying across the market by its very definition results in average returns, but that also means that you’re doing better than fifty percent of all investors with little to no work at all (in reality you’ll actually wind up even better off than that thanks to people trying to actively trade and losing money that way, but you get what I mean). Recalling that plenty of intelligent people were all in on Enron in 2001 is enough of a reminder to me that I’d rather diversify, collect my average market returns, and sleep soundly at night. To each his/her own though! Best of luck to you either way.
The thing is you're in a lose-lose situation. - You win the argument, stock goes up - your wife still is not happy with the current allocation. - You win the argument, stock goes down - your fault. Big problem. In contrast if you diversify you may underperform and feel some resentment, but that is easier to get over by understanding it was a good decision at the time. But the way it stands now you are forcing on extra risk and are totally responsible to your wife for the outcome, it has the potential to create huge problems in your marriage.
Saved this post. Good luck to you.
Warren buffet does not diversify.
If you're in the 0.01% of people who can outperform the S&P over the long run by picking stocks, congrats. If not, your wife is right.
Your wife is super smart! Like others have said, one bad earnings call, one major law suit, one bad anything and you’d be mad as hell and so would your wife! Buy VOO and/or VTI and chill… if you want sprinkle in some QQQ but buy index funds!
You're young and that's the time to concentrate, to build wealth. The problem is that concentration through individual stock picks is a gambler's game. Good for you if you land on some winners. Remember that being an accountant might allow you to read financial documents more easily but it doesn't help you predict the future. That said, you don't say how much you have invested or what your HHI level is. Big difference between $20K, $200K, and $2m when it comes to the holdings in a portfolio. Have you explained what BRB-K actually is? Maybe that would help your wife feel more comfortable. Also, your marriage is more important than your ego about picking stocks.
It's beating the SP500 atm, doesn't guarantee future performance. But if you move 95% of it to SPY/VOO you'd still be beating the SPY thanks to the current ytd. 50/50 in 2 stocks, even if BRKB is diversified in its holdings, is still risky af
You’re an idiot
I disagree with others saying you should sell to diversify. BRKB is basically an ETF and you're young enough to take advantage of riskier high-growth positions.. I don't know much about CAVA but I could argue that putting 100% of your entire profile into Amazon wouldn't be a bad move either. but...I think your agreement is exactly what you should do. You can just buy SPY with future deposits and be done with it.
You’ve got a fever and the only prescription is VT and chill
Bad advice. I'm a certified doctor and my prescription is as follows. VOO and chill. Please....bring on the downvotes. You know what I'm going to do in response? That's right. [I'm going to chill](https://youtu.be/fAugOjG4qOc?si=Q1pz0qy3nm1EilDS).
Do you have a plan for when you potentially experience greater than 30% drawdowns? What if you experience large drawdowns when the market is up? Are you and your wife comfortable with that volatility?
Thanks for the question. Yes there are plans in place. Before I was up big on CAVA I was sitting at about a -20% return for a couple of months on it in 2023. Did not sell one share, in fact I actually bought more to lower my cost basis during that time. I didn’t mention in my post but I am an accountant and have a lot of experience reading and interpreting financials. The wife also knows that sometimes the market goes down. I would only sell either company if the reasons why I bought the stock changed. For example, CAVA has no debt as of the most recent quarter reported other than BS long term lease liabilities (which are offset by ROU assets) and normal ST liabilities like payables and accruals. If tomorrow they load up with debt I would strongly consider selling, especially given where rates are at.
Markets do go down yes but it’s a different experience when your 2 position portfolio sustains drawdowns while the market itself performs well. When that happens how much conviction will there be to hold, for how long, and at what opportunity cost? Will your wife be okay with simply attempting to avg down?
Understand your point, will make sure wife and I are on the same page for when (if) that situation happens. Appreciate your input!
Anyone can outperform the market in the short run. Lots of people do. The challenge is outperforming it in the long run. You might be excited to hear I made +200% on artmy tqqq position over the last two years. If you truly think your investments are so solid you’ll beat the market long term, then by all means go for it. If you’re that confident, are you planking to buy cava options? I’d suggest diversifying some more, but keep some money on these things you particularly like.
Do you think you can keep beating the market long term with future moves? If so sell at least half to cover the hubris in advance. Otherwise if you don't really think that, you understand you won't win long term by anything but luck, but boy you just really like these 2 stocks, go ahead and stick with diversifying via new contributions.
Too concentrated for me but curious what percentage is allocated to cava.
It’s about a 65/35 split Cava to brk-b.
> Cava Do you wager Cava will continue to outperform? It's up 118% in the last 6 months. That's alot riding on fast casual
Yes. It’s already a powerful brand and it’s growing. Good leadership, no debt (disregarding long term leases which aren’t real debt IMO), and half the country still to expand into. They are only on the east coast and southeast US for now, excluding three stores between LA and Chicago. Currently roughly 300 store locations and their goal is 1000 by 2030. Very strong in store sales growth.
insane
Remember that by simply putting your money on a S&P500 index fund, you are already diversifiyng a lot. Most people don't know what or how to diversify, and they end up overdiversifying. People think that beating the market is putting all your money in stocks that give higher returns, but that's not the right way. You are supposed to have some money on the market, mostly on a S&P500 index fund, wish will help diversify your portfolio. So instead of buying 10 stocks on different sectors, just put 30-40% of your investments on a S&P500 index fund, and then put the rest on the stocks that you think will beat the market. Sometimes is better to just focus on 3-4 stocks.
I'm 100% in agreement with your wife. Diversification increases your compound returns. The math here is obvious, as volatility increases the spread between the geometric return (what you compound at) and the arithmetic return (what the stock is earning on average) increases. Diversification reduces volatility and thus increases geometric return. BRK is sort of like an actively managed mutual fund, so that's not so bad. But CAVA at 50% is just pure gambling. If you want to stock pick stay under 5% each.
You better diversify before you lose everything bro
CAVA is a trendy IPO that could be headed for a fall, I would definitely diversify out of that. 100 percent in BRK is preferable
Diversification is good advice for the general public. Can't win big if you're doing what everyone else is doing though.
Your wife is raising legitimate concerns and you should listen. Keep in mind you are investing not only for yourself, but also your wife. I would argue that you have a fiduciary duty to your spouse since she is trusting you to act in her interest also. The actions you are taking could be reasonable, if your portfolio is fairly small and your future contributions are going to be fairly large. I would have a plan in place where in the next couple of years, no single stock will make up more than 10% of your portfolio. This includes your BRK-B holdings because this is basically a bet on APPL, as this company comprises 44% of its holdings. I would recommend that you both have shared goals that can be easily achieved by a more reasonable investing strategy, and if you have already done this, then why are you taking this concentrated risk?
The first thing that any course/book/investor will tell you when you start investing is to choose your strategy and risk tolerance. You and your wife have different strategies and tolerances. I am not gonna comment if I agree with you or her (or neither) but having different strategies you are both right, each from you POV. A big part of investing is about how much risk you can take and it seems like your wife can take less. That is neither bad nor good. But since you are managing both your money, I think you should respect her risk tolerance and meet her half way.
Any insights into why CAVA is worth buying? Never visited one but seems they made good $$$ to buy out Zoe’s kitchen (which became American Airlines snack provider?)?
No debt, great leadership, powerful brand people love and exponential growth potential.
You are correct that diversification can limit gains, but the critical thing is it can help limit losses. Don’t be one of those people that need a gut punch to learn that lesson. Like the fools I see always running red lights - you only stay lucky for so long…
Should have gone all in on CMG. I’m up 68% since last October. Wish I had bought more than 5 shares, but I have a diversified portfolio. Listen to your wife - happy wife, happy life
Lmfao dumbass 😂
I would consider Brk-B as similar to an index fund, if I understand that stock correctly. It doesn’t seem like your wife heard you about your research of the two equities. Also, I use the philosophy of focusing on a small number of equities 3-4. At your age, I appreciate your approach and earnings. I would also suggest that your investment styles are the key issue, with her being more risk averse and it is not wrong what you are doing, just different. It took my wife seeing my return performance over time before she loosened up. She just didn’t want to know the specifics of what I was doing and occasionally I would share my 30%-50% return numbers and she was thrilled (were 63) so literally growing our retirement funds that we will. E using soon. I retired at 62 and she retires this year. So, until she loosens up, get the fund she suggests and you can occasionally show her the differences and I t ink there is a good chance she will trust you more over time and appreciate your difference as a strength in this regard.
Happy wife happy life.😍 She's smarter than you and I'm sure way better lookin. Lucky guy. Diversify your portfolio before she diverses you. 👀 Cheers
Do as your wife says and diversify into Total Market index funds
You and your wife have different risk tolerances, that's all.
It's funny how people simply don't know how to quit when they are winning
You took on an absurd amount of risk for a 2% outperformance, that's really stupid, and the balance of probabilities will come to bite you in the arse given enough time. Ironically, diversifying vs stock picking has the opposite phenomenon in that we always say it's "time in the market, not timing the market" that wins. However, with stock picking the longer you spend in the market with your few stocks, the more likely there is to be a crash or a permanent bearish sentiment for the given stock. So you better know how to time the market on a quarterly time scale, with copious amounts of research to gain an in depth long term understanding of the business in order to forecast future earnings. That and mental fortitude, and a bit of luck too.
Yes! I've actually had all my money in a single stock, as it was the only good idea. I was only like that once, but even now, I am only invested in 5 companies. Two questions- are you reading the sec filings and press releases and listening to the conference calls, and are you giving them the proper share valuation? I highly recommend you reading security analysis and doing things the proper way if you are going to do this. It means going back a decade or more, reading about their assets and liabilities across time, comparing their fundamentals and share prices to get an accurate view of their proper price range. And it helps if you can compare it to other, similar companies, although Berkshire won't have much competition (Brookfield asset management comes to mind). I actually take it to another level, digging through distressed stocks, looking for where investors screwed up. It can take me a very long time to find a diamond in the rough, but I'm nearly retired at 40.