• We define risk as the permanent loss of capital. Our past experience shows that the biggest risk factors – in order of importance - have been:
  1. we ourselves: making non-rational decisions due to mental biases or lack of discipline
  2. Deficiencies in our management system.
  3. Inconsistencies in our investment philosophy.

• We do not consider fluctuations of share prices a risk:
  1. we expect them since many highly successful value investors had negative results up to 30% of the time
  2. as long as the underlying business models of our investee companies stay intact, their intrinsic value will continue to increase.