“Put all your eggs in one basket and then watch that basket very carefully.”
- Stanley Druckenmiller

When I first started investing, I used to think that diversification was the ultimate key to success. My portfolio was scattered across so many stocks that I could barely keep track of them. Most of these were the usual suspects, the mainstream names everyone talks about. I wasn’t doing much due diligence beyond skimming headlines and following the crowd. My money was spread thinly, and as a result, I never experienced any meaningful or exponential gains. Worse, I had no conviction. During downturns or periods of volatility, I’d sell too early, driven by fear rather than logic.

Over time, I realized this wasn’t the way to achieve real, compounded gains over the long term. For me, the path to success lays in concentration: focusing on a few stocks I knew inside out. That approach required real work: digging deep, doing the research, and moving beyond the surface. Sure, you can get lucky occasionally, but there are no shortcuts if you want to stay ahead of the herd.

The more effort you put in, the more conviction you build. And that conviction becomes your greatest asset. It gives you the confidence to weather downturns, even adding to your positions when prices are low and sentiment is overwhelmingly negative. Conviction helps you see opportunities when others only see risks. It makes you believe in the companies you’re holding for the long term, not just because of their potential but because you’ve done the work to understand them deeply. Over time, I’ve learned that stock prices often reflect sentiment more than fundamentals, and understanding this has been a game-changer.

Nowadays, my long-term portfolio is highly concentrated, rarely more than 5-10 stocks. For each one, I know almost everything there is to know, down to the smallest details that it can sometimes turn into an obsession. I would joke with a friend that if you can’t name the CFO of a company you’re holding long term, you don’t know enough about it. That level of understanding builds the kind of conviction that allows you to make big bets when it matters. It’s risky, yes, but the rewards are worth it when/if your thesis plays out.

Of course, there are short-term trades or interesting opportunities you can capitalize on, but I’m talking about long-term investing with a 5–10 year horizon. There’s nothing more rewarding than being early on an idea, building conviction, and watching your thesis come to life. But it takes time, patience, and a deep understanding of what you’re investing in.

Concentration isn’t for everyone, as it comes with higher risk compared to diversification, and for 90% of people, it’s simply easier and safer to stay diversified. The downturns with concentration can be very painful and agonizing, but the potential rewards of concentration couple with conviction are undeniably greater.

I’ve always felt aligned with Stanley Druckenmiller’s approach to investing, as his philosophy of making concentrated, high-conviction bets deeply resonates with my own experience and strategy; so I’ll end this with a couple of my favorite quotes.