Few people garner attention from everyday and professional investors quite like Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett. Despite being fallible like every other investor, the Oracle of Omaha has outpaced the total return, including dividends, of the benchmark S&P 500 by a factor of 153 since becoming CEO in the mid-1960s -- a 3,787,464% return for Berkshire's Class A shares (BRK.A), versus 24,708% for the S&P 500, as of Dec. 31, 2022.

Buffett's not-so-subtle secrets to success are aplenty. He has a relatively narrow research focus, tends to buy profitable, dividend-paying, time-tested businesses, and prefers to hold those positions for long periods. But the factor that might be most responsible for Berkshire Hathaway's outperformance is portfolio concentration. Buffett has long believed that diversification is only necessary if you don't know what you're doing.

Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Continue reading

Source Fool.com