In this episode, we discussed concentration and risk in both investing and financial planning.  Nathaniel started the conversation by asking: why would anyone invest in your 20 fair ideas if you can invest in your best 5 ideas?  The key is to understand your circle of competence.  Like Nathaniel always says, I know what I know, and I know what I don't know.  Dan added, the most dangerous investment is when people think they know something, but they truly don't.  Using Coca-Cola as an example, Nathaniel explained how PRICE and VALUE, RISK and VOLATILITY, are not the same things.  Understanding their differences, doing deep research, studying the company, plus having a margin of safety, are the tools to minimize risk while concentrating an investment's weighting.  Dan explained why over-diversification in investing can harm you. Tim added that the reason why we are comfortable with concentration, other than Nathaniel's ability, is that we have done financial planning to a T and thus understand our situation and goals.  Like in life, you have to concentrate on your primary job/investment, so that everything else is achievable later in life.  Don't get caught up and get sidetracked by "but my friends are doing XYZ" - just focus on what you are good at.