You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical.

What do you call a stock that's down 90%? A stock that was down 80% and then got cut in half.

When people ask me what I do for a living, I generally tell them 'I run a hedge fund.' The majority give me a strange look, so I quickly add, 'I am a money manager.' When the strange look persists, as it often does, I correct it to simply, 'I'm an investor.' Everyone knows what that is.

One of the best investors around, Joel Greenblatt, has written a popular, charming and funny book about investing in great companies at low P/E multiples. To simplify an already simple book, great companies are generally measured as companies that can generate lots of profit without requiring a lot of capital. This means that they have high ROEs.

I will keep a substantial long exposure to gold -- which serves as a Jelly Donut antidote for my portfolio. While I'd love for our leaders to adopt sensible policies that would reduce the tail risks so that I could sell our gold, one nice thing about gold is that it doesn't even have quarterly conference calls.

Microsoft could help Facebook with one of the biggest challenges, namely monetizing its traffic without reducing the user's experience. It's obvious that Microsoft needs traffic and Facebook needs search.

The loss was not bad luck. It was bad analysis.