We dabbled in shorting early on, thinking we should take advantage of the bad companies we uncovered as well as the good. In reviewing our shorts after our first year, we found that in each case we would have made money if we'd actually closed out the positions, but we hadn't. We were good at [...]

The more specialized the knowledge necessary to understand a business, the less likely we’ll invest in it. Who’s going to be the better biotech investor, the person who ran drug trials for Merck for 25 years or us? We do little in pharmaceuticals, healthcare, and computer technology.

Our strategy from the beginning has been to focus on areas where we believe we can have some advantage, where there is a greater prevalence of irrationality and higher likelihood of mispriced assets. For us, that's not going to be investing in Microsoft or in some quantitative strategy against a room full of Goldman Sachs' [...]