The managers at fault periodically report on the lesson they have learned from the latest disappointment. They then usually seek out future lessons.

Does the business have a consistent operating history?

I mean there is no capital requirements to it or anything of the sort. And basically, I said there were possibly financial weapons of mass destruction, and they had them. They destroyed AIG. They certainly contributed to the destruction of Bear Sterns and Lehman. Although Lehman had other problems, too.

There are a few investment managers, of course, who are very good - though in the short run, it's difficult to determine whether a great record is due to luck or talent. Most advisors, however, are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship. Rather than listen to their siren songs, investors - large and small - should instead read Jack Bogle's The Little Book of Common Sense Investing.

Nevertheless, as circumstances presently appear, I feel substantially greater size is more likely to harm future results than to help them. This might not be true for my own personal results, but it is likely to be true for your results.

We've got a wonderful economic formula in this country.

Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles: How many legs does a dog have, if you call a tail a leg? The answer: Four, because calling a tail a leg doesn't make it a leg.