Home / Business / Warren Buffett once used LeBron James to explain diversification risk and compared his return to Cleveland to the disappearance of New Coke

Warren Buffett once used LeBron James to explain diversification risk and compared his return to Cleveland to the disappearance of New Coke



Warren Buffet Basketball Game
  • LeBron James led the Los Angeles Lakers charge on Sunday at the 17th NBA championship.
  • Warren Buffett once pointed out James’ critical role on the basketball court to highlight the disadvantage of diversification as an investor.
  • “If you have LeBron James on your team, don’t take him out of the game just to make room for someone else,” Berkshire Hathaway̵
    7;s famed investor and CEO said in 2008.
  • “It’s crazy to put money into your twentieth pick rather than your first pick,” he added.
  • Buffett also likened James’ return to the Cleveland Cavaliers in 2014 to Coca-Cola’s return to its classic formula.
  • Visit the Business Insider home page for more stories.

LeBron James led the Los Angeles Lakers to a record 17th NBA championship Sunday night. Warren Buffett, a longtime fan and confidant of the basketball superstar, once used James’ outsized contribution to his team to explain the danger of diversification for investors.

“If you have LeBron James on your team, don’t take him out of the game just to make room for someone else,” the billionaire investor and CEO of Berkshire Hathaway told a group of business school students in 2008.

“It’s crazy to put money into your twentieth choice rather than your first choice,” added Buffett, according to Dang Le, one of the students in attendance.

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Buffett embraced that approach to Berkshire. Its five largest holdings – Apple, Bank of America, Coca-Cola, American Express and Kraft Heinz – account for more than 75 percent of its approximately $ 200 billion equity portfolio.

On another occasion, the investor compared James’s return to his hometown team, the Cleveland Cavaliers, to Coke’s return to its classic formula.

“He loves Cleveland, Cleveland loves him,” Buffett said in 2014, according to cleveland.com. “In a way, it’s like the new Coca-Cola and the old Coca-Cola.”

“Years ago they would have taken the old Coke away to make a new one, and then suddenly everyone remembered how much they loved the old Coke,” he continued. “That’s right.”

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Buffett and James first met when the athlete visited Omaha to shoot a skit for the Berkshire annual meeting in 2007. The two have been admirers of each other ever since.

“I’m a guy from Akron who has lived in poverty for a long time and, at times, I send financial statements to one of the richest kids ever,” James told Sports Illustrated in 2012.

“It’s a little scary,” he continued. “I’m like, ‘Why are you talking to me?'”

Meanwhile, Buffett praised James’ maturity in an interview with the Miami Herald in 2012 and the player’s “money mind,” or financial expert, in an interview with USA Today in 2018.


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