In a world where everybody, or at least most people, seem very sure of their investment opinions, I find that coming to some level of certainty is hard and often times it happens only slowly over time. Perhaps, as Daniel Kahneman astutely observed, people prefer answering a different and simpler question regarding an investment than a hard one. Instead of expressing a thoughtfully considered view on a business’s future prospects (which requires work and earned insights), many folks are simply deciding that they like the stock. System 1 vs. system 2.
I have evolved over time to having kind of barbell portfolio. It contains legacy compounders, tech stalwarts, and exposure to innovative next generation businesses and technology. It did not start with a master plan but evolved as ideas worked and compounded and my knowledge grew.
Munger compared the stock market to a pari-mutuel horse track where the odds capture the expected outcome of each horse. I like spreading my bets out so I have some money on the lower-payout proven companies selling at more reasonable multiples and also having exposure to some with longer odds but greater prospects, based on my circle of competence and expectations of the future.