Tom Gayner was in Singapore last week for the Markel Group Lunch, and when asked why he continues to hold Alphabet despite the looming threat of disruption in Search, here’s his answer:
He pointed out that Alphabet boasts over $100 billion in cash and equivalents, giving the company a strong foundation for reinvestment. More importantly, Alphabet has the talent capital required to navigate future challenges and succeed.
But…! Gayner didn’t shy away from acknowledging the inherent uncertainty in the tech industry.
He argued that this uncertainty underscores the importance of a diversified portfolio strategy — a cornerstone of Markel’s investment approach.
(For context, Alphabet holds a significant spot in Markel’s portfolio, representing nearly 5% of their holdings, second only to Berkshire Hathaway.)
My thoughts:
Gayner’s perspective reminds us of the humility needed in investing. While diversification may not sound as sexy as the chest-thumping roar of concentration, it reflects an investor’s respect and acknowledgment of business uncertainty (especially with tech).
We can read as much as we want, investigate as thoroughly as possible, and punch in the most comprehensive DCF model… but it doesn’t change the fact that there will always be a range of outcomes.
There are no guarantees in investing, but there are intelligently sized bets when the odds are tilted in your favor. While you should always size your most confident bets bigger, it shouldn’t take you down when things don’t go as planned.
A diversified approach prioritizes steady compounding, whereas a concentrated portfolio emphasizes compounding speed while assuming higher risks.
For me, it’s steady compounding. How about you?
Invest wisely,
Thomas