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Sometimes that's more useful than a high central expected return that contains material risk of downside.


No small thing, that.

I used to focus far to much on that central expectancy, and not enough on how wide the confidence interval around it is. I see Berkshire with a central expectation of about 8-9% annually over the next decade, with "95-percent confidence interval" maybe 6-11%. For my needs, that's much better than a stock with a central expectation of 12 percent, but a range of -5 to 20.

This is particularly important for those that do tend to run a concentrated portfolio.
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