So how many companies do you need to be expert in? That's a different question entirely, and one that circles back to the concepts of diversification we discussed earlier.

The key insight is this: **diversification has a limit, and that limit reveals something crucial.** Every time you add a company—from one to two, two to three, three to four—you gain tremendous diversification benefit. But that benefit declines with each successive addition.

This means one can indeed be very diversified while also possessing deep expertise in their holdings. The math is clear: the benefit of owning a 31st company is not only negligible in terms of diversification, it's actively dangerous. Why? Because it removes time and focus from the other thirty companies.

**Every time you add, you are removing the possibility of becoming more expert in the areas where you can win.**

## Staying in Your Circle

I have no interest in exiting an area where we can be the winner to begin participating in a new area where we are amateurs. We stay where we are experts. If we expand, we do so over years.

And that works.