The best businesses in the world are ones where the reinvestment rate is high and the return on incremental capital is also high. Those are very, very rare. And when you find them, the right thing to do is to do nothing, which is actually very hard to do as an investor because you're paid to do things.
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What's being penalised is diversification itself. Punishment awaits any portfolio that doesn't look like the index, says UBS. Clever stock picking won't deliver outperformance like it once did, not just because it's hard, but because it means allocating cash away from the dominant eight.
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