Diversification through tech companies

I spent a week in silicon valley a few weeks ago and heard about an interesting investment strategy. The gist of it is that companies like Google, Amazon and Facebook have incredibly talented people that can do a much better job at diversifying their business and ensuring its long term survival than an average Joe can do at diversifying his portfolio.

I talked to a very experienced and successful investor who has beaten the market for the past 20 years owning only 4 stocks at a time (almost always holding Amazon, Apple and Google) and says you can't really know really well more than a few companies. In other words diversification for its own sake ends up being riskier because you end up purchasing stocks you don't really know (yes, I know ETFs are a thing, just looking for better returns).

Anyone heard of this before? I'm seriously considering going all in on FAAG (sans Netflix, more heavily on Google which I believe is the highest diversified of these) and wait it out for 10 years.

Edit:

To give an example as I gave in the comments, investing in Alphabet gets you in:

• Online advertising
• Cloud services
• Self driving cars (waymo)
• Energy (project sunroof, Makani Power, multiple energy projects)
• Education (Google Education)
• Smart homes (Nest)
• Hardware (Pixel, speakers)
• Media (YouTube, Google music)
• Software (Android, Google office)
• Telecom (fiber, Google Fi, loon)
• Biotech (Calico, Redwood Robotics)
• Venture capital and growth capital (Google ventures, Capital G, Jigsaw)
• AI (deep mind, Jetpac)

And many more that I'm missing. That's pretty well diversified and the most promising projects will be better funded to give you the best return.

Submitted November 03, 2017 at 07:43PM by FranciscoGalt http://ift.tt/2zcMznq