Tuesday, 14 August 2012
Preservation of Capital is the first aim.
Since preservation of capital is Warren Buffett's first aim, his primary focus is, in fact, on avoiding mistakes and correcting any he makes and only secondarily on seeking profits.
This doesn't mean he spends most of his day focusing on what mistakes to avoid. By having carefully defined his circle of competence, he has already taken most possible mistakes out of the equation. As Buffett says:
"Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them .... Overall, we've done better by avoiding dragons than by slaying them."