If you understood a business perfectly and the future of the business, you need very little in the way of a margin of safety.

Resolution Trust Company was set up to liquidate a bunch of assets that the government had inherited because the savings and loans went broke.

You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct. True conservatism is only possible through knowledge and reason.

The latter qualification brings to mind a fellow who applied for a job and stated he had twenty years of experience-which was corrected by a former employer to read "one year's experience-twenty times.

I have pledged - to you, the rating agencies and myself - to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow's obligations. When forced to choose, I will not trade even a night's sleep for the chance of extra profits.

You don't need to be an expert in order to achieve satisfactory investment returns. But if you aren't, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences.

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.