The more confidence I have in each one of my stock picks, the fewer companies I need to own in my portfolio to feel comfortable.

The way we make money as a group is that we don't pay a lot for anything, and most of the stocks we buy have low expectations.

So one way to create an attractive risk/reward situation is to limit downside risk severely by investing in situations that have a large margin of safety. The upside, while still difficult to quantify, will usually take care of itself. In other words, look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.

Look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.

There's a clarity that comes with great ideas: You can [easily and simply] explain why something's a great business, how and why it's cheap, why it's cheap for temporary reasons and how, on a normal basis, it should be trading at a much higher level. You're never sitting there on the 40th page of your spreadsheet, as Buffett would say, agonizing over whether you should buy or not.

The more confidence I have in each one of my stock picks, the fewer companies I need to own in my portfolio to feel comfortable.

I think the exercise of trying to figure out how to simplify concepts has been incredibly helpful to me over the last 13 years of teaching and I hope my students have benefited from it.