Saturday, January 17, 2015

Warren Buffett on having an extra level of safety...

This seems to be a fitting quote after the failing of some of the foreign exchange brokers that occurred after the Swiss National Bank move. As quoted by Peter Bevelin in one of my interviews with Peter:
Buffett: “We want to always keep a lot of money around. We have so many extra levels of safety we follow at Berkshire…. in financial markets, almost anything that can happen does happen. And it pays to conduct your affairs so that no matter how foolish other people get, you’re still around to play the game next day.”
In Seeking Wisdom, Peter also wrote:
Some systems are more prone to accidents than others because of the number of components, their connections and interactions. The more variables we add to a system, and the more they interact, the more complicated we make it and the more opportunity the system has to fail. Improving certain parts in highly interconnected systems may do little to eliminate future problems. There is always the possibility of multiple simultaneous failures and the more complicated the system, the harder it is to predict all possible failures.