Bill Ackman Thinks Diversification is for the Lazy

By on March 4, 2010

Bill Ackman made a speech at the Active/Passive Investor conference in which he referred to those investors who overdiversify as lazy.

“They haven’t done enough research into any of their companies. If they’ve got 200 positions, do you think they know what’s going on at any one of those companies at this moment?

“As a result of overdiversification, their returns get watered down. Diversification covers up ignorance.”

SMA Comment: Overdiversification is probably better than underdiversification for the majority of small investors. Ackman doesn’t seem to realize that most investors don’t have the time or resources to pick stocks like he does. Besides, he’s been touting Target for years and it hasn’t been a particularly good performer. The problem with only having a few positions is there are always potential unseen landmines that can cause a stock to collapse no matter how much due diligence an investor performs. Ackman should read the Intelligent Asset Allocator by William J. Bernstein, because he just made a very unintelligent statement.

Source: Business Insider
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7 Comments

  1. Pingback: Learning Hedge Fund Portfolio Allocation

  2. Breadstick

    May 29, 2014 at 4:05 pm

    I think Bill Ackman might know a little bit more than you when it comes to investing

  3. Barron Maestro

    May 29, 2014 at 7:30 pm

    He may, but he makes mistakes like everybody else which are only evident in hindsight. Now head back to the Olive Garden where you belong.

  4. Felix Gillie

    March 15, 2016 at 10:08 am

    Mr. Ackman probably wishes he were a little more lazy the last couple of years. He wouldn’t be losing (as opposed to winning!) and his redemptions would be less.

  5. Montresor

    March 15, 2016 at 10:17 am

    Ackman’s forays into Herbalife and Valeant argue against ambition in the stock market. Hedge fund fees are especially onerous when applied against mediocre, or worse, performance.

  6. Carl Icahn

    March 16, 2016 at 10:23 pm

    Ackman blew up another hedge fund years ago.

    http://www.businessinsider.com/bill-ackman-gotham-partners-blow-up-2016-3

    He doesn’t seem to ever learn.

  7. Mario Rodriguez

    March 17, 2016 at 8:10 pm

    I prefer to be lazy.

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