Focus, Not Concentration

To focus is to have clarity on what is and what isn’t. It is to know what is relevant and what can be ignored. To concentrate is to put all of one’s energy and resources into one place. Investors are rewarded for focusing on what is important, penalized for concentration. This year if you concentrated in the fastest moving stocks for the first nine months, you have born the pain in the last 6 weeks. If your stock index was concentrated in tech stocks, or your commodity index was weighted to oil, or your bond index was concentrated in long bonds, you drew the short straw. In investing, focus and concentration are not synonyms.

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