In 2008, a younger investment manager asked me to explain our approach to investing and to give him any additional advice that might be useful. In response to his request, I wrote the following letter.

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Dear Jack,

Thank you for your questions, which I will try to answer in this letter. I apologize for the length of the letter. It is difficult to do justice to a complex subject in a few paragraphs. Also, please be mindful that there is nothing sacred about the way I invest or about my ideas. As in so many things in life, there are many differing approaches to being a successful investor.

There is a saying that going to church does not make you a Christian any more than standing in a garage makes you a car. And it also is true that having specific strategies and approaches to investing does not make you a Warren Buffett. But it helps, and it has helped me to make reasoned investment decisions, especially during difficult times.

Our central strategy is to purchase deeply undervalued securities of strong and growing companies that likely will appreciate sharply as the result of positive developments. Our reasoning is that the undervaluation, growth, and strength should provide protection against permanent loss, while the undervaluation, growth, strength, and positive developments should present the opportunity to earn high returns.

I emphasize that our first goal is to control the risks of permanent loss. When we analyze a security, we first look ...

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