“The first stop in Warren [Buffett]’s investing process is always to say, ‘What are the odds that this business could be subject to any type of catastrophe risk—that could make it (the business) fail?’ And if there is any chance that any significant part of his capital would be subject to catastrophe risk, he just stops thinking. NO. He just won’t go there. It is backwards the way most people think because most people find an interesting idea and figure out the math, they look at the financials, they do a projection and then at the end, they ask, ‘What could go wrong?’ Warren starts with what could go wrong.” –Alice Schroeder.
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