Temperament is also important. Independent thinking, emotional stability, and a keen understanding of both human and institutional behavior is vital … - Warren Buffett

[T]he idea of buying dollar bills for 40 cents takes immediately with people or it doesn't take at all. It's like an inoculation. ...It doesn't seem to be a matter of I.Q. or academic training. It's instant recognition, or it's nothing.

We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it. In stating this opinion, we define risk, using dictionary terms, as “the possibility of loss or injury.

The most common cause of low prices is pessimism — some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.