“I don’t want a lot of good investments; I want a few outstanding ones.”
Phil Fisher
Focus
Running a focused portfolio—where you invest in just a handful of carefully chosen companies—can boost your returns because it lets you put your money where your best ideas are, instead of spreading it thin across lots of average ones. Think of it like gardening: if you water a few strong plants you know will grow big, you’ll get a better harvest than if you sprinkle water over a whole field of random seeds. When you really understand a business and see it’s undervalued, betting big on it can pay off more than playing it safe with tons of small bets. It’s not about avoiding risk—it’s about knowing your stuff so well that you don’t need a safety net of dozens of companies. Fewer, smarter choices can mean bigger wins, as long as you’re patient and picky.
“I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches—representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all. Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”
Warren Buffett
Attention Residue
Sophie Leroy, a professor at the University of Washington, discovered the concept of “attention residue,” which is when your brain doesn’t fully switch gears after moving from one task to another. She found that when you stop working on something—especially if it’s unfinished or interrupted—some of your thoughts stay stuck on it, even as you try to focus on something new. This leftover mental baggage slows you down and makes it harder to concentrate, creating a “cognitive switching cost” or brain lag. Her research shows that this happens because our minds struggle to let go without closure, affecting how well we perform on the next task.
“Investors have been so oversold on diversification that fear of having too many eggs in one basket has caused them to put far too little into companies they thoroughly know and far too much in others which they know nothing about.”
Phil Fisher
The Power of Less
Focused attention is more powerful than scattered, unconcentrated attention because it channels energy into a single point, amplifying its impact—like sunlight through a magnifying glass. Imagine the sun’s rays spread out over a wide area: they warm things up a bit, but nothing dramatic happens. Now, take a magnifying glass and focus those same rays into one tiny, intense spot. That concentrated beam can ignite a fire. The input (sunlight) is the same, but the output (heat or flame) explodes because it’s directed with precision. This is an asymmetry: one input, when focused, creates outsized results compared to when it’s diffused. Now, connect this to a focused portfolio. When your attention—and money—is scattered across dozens of companies, it’s like sunlight sprawled over a field: you get some growth, but it’s diluted, average. But when you zero in on a few carefully chosen companies, deeply understanding their value, it’s like the magnifying glass. Your single input—your time, research, and capital—can produce multiple outputs: bigger returns, sharper insights, and less wasted effort. This asymmetry mirrors what Sophie Leroy’s attention residue warns against, too. Scattered focus drags you down with cognitive lag, while a concentrated approach cuts through the noise, letting you harness your best ideas for maximum impact. It’s not just about doing less—it’s about doing less better.
“The idea of excessive diversification is madness. Wide diversification, which necessarily includes investment in mediocre businesses, only guarantees ordinary results.”
Charlie Munger