Our View of Risk & Risk Control

1. Given the Uncertainty Principle and our notion of wide valuation bands, the margin of safety for our investment selections has necessarily be substantial.
   
   

2. So long as we have the margin of safety, we are undeterred by stock price volatility. Price volatility is not risk for us; rather, it is opportunity.
    

3. We actively seek diversification, but are very reluctant to "diworsity", i.e. to establish lower quality positions purely because of the need to diversity. The size of each position is determined jointly by its margin of safety and its risk/reward characteristics, and the need of diversification. For very favorable risk/reward characteristics and the margin of safety, we are comfortable with having a huge percentage of the portfolio concentrated in that position.