The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy

if the company itself is doing well and is managed by smart people, eventually its inherent value will be reflected in its stock price.

And that is the heart of focus investing: concentrating your investments in companies that have the highest probability of above-average performance.

Index investors can do no worse than the market-and no better.

Choose a few stocks that are likely to produce above-average returns over the long haul, concentrate the bulk of your investments in those stocks, and have the fortitude to hold steady during any short-term market gyrations.

"With each investment you make, you should have the courage and the conviction to place at least 10 percent of your net worth in that stock."10

"By periodically investing in an index fund," Buffett says in his inimitable style, "the know-nothing investor can actually outperform most investment professionals."2