In 1996, Warren Buffett shared his thoughts on portfolio diversification at Berkshire Hathaway's annual meeting. He said: "Diversification is a protection against ignorance," and it makes very little sense for anyone who knows what they're doing.

Readers should not misinterpret that sentiment. Buffett is saying diversification for the sake of diversification is pointless. Rather than arbitrarily spreading capital across different companies and sectors, investors should buy into quality businesses within their circle of competence, and then patiently hold those stocks for as long as their investment thesis remains intact.

Berkshire practices that philosophy and, as a result, its stock portfolio leans very heavily toward one specific market sector (and one specific stock). Here are the details.

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Source Fool.com