Warren Buffett: Scuttlebutt approach

‘You don’t want to be chasing down every idea. Therefore, you should have a strong presumption. You should be like a basketball coach who runs into a 7-footer on the street. You’re interested to start with. Now you’ve got to find out if you can keep him in school, if he’s coordinated and all of that sort of thing. And that’s the “scuttlebutt” aspect of it. But it should be the last 20% or 10%. You don’t want to get too impressed by that because you want to start with a business where you think the economics are good – where they look like 7-footers. Then you want to go out and use the scuttlebutt approach to test your original hypothesis.’

—Warren Buffett (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest).