Thanks to Will for bringing this back up to me. This quote
is from my friend Miguel Barbosa’s interview with Alice Schroeder (HERE).
“Typically,
and this is not well understood, his way of thinking is that there are
disqualifying features to an investment. So he rifles through and as soon as
you hit one of those it’s done. Doesn’t like the CEO, forget it. Too much tail
risk, forget it. Low-margin business, forget it. Many people would try to see
whether a balance of other factors made up for these things. He doesn’t analyze
from A to Z; it’s a time-waster.”
..........
That comment from Schroeder is in line with a comment Mr.
Buffett made at the Berkshire Hathaway Annual Meeting last year, when he said: "Charlie
and I have a number of filters that things have to get through before we'll
think about them."
I’ve mentioned filters on a couple of occasions (HEREand HERE),
and I’ll reiterate that I think it is one of the most important things to spend
time developing well in order to achieve “mastery” in the investment business
(note that mastery still means you’ll make plenty of mistakes, especially in
the field of investing). If your filters are good enough, it will also make it
difficult to attend conferences where you network with a lot of other
investors. Many people will try to talk to you (sometimes endlessly) about
their favorite stock idea; it won’t pass one or more of your filters, so you
will lose interest; and yet they will likely keep talking.