At Berkshire we have certain filters that have been developed. If in the course of a presentation or evaluation part of a proposal[,] an idea hits a filter then there is no way I will invest. Charlie has similar filters. We don’t worry about a lot of things as we only have to be right about a certain number of things – things that are within our circle of competence. A great example is the Nebraska Furniture Mart that you visited this morning. Mrs. B took cash because she didn’t understand stocks. It is important to know what I can do. I have no idea which company will dominate in the auto industry in the next 5 years so I don’t pick. I prefer simple things in my circle of competence. Good decisions scream at you. For example in 2008 you shouldn’t have been afraid just because assets were cheap. In your entire investment lifetime you may have 6 times when this happens and it is ‘raining gold’.
Related previous post (one of the all-time most read posts on this blog): Filters