The Paradox of Risk-Taking in Investing

In high-stakes arenas, success depends on taking risks, but success is not guaranteed. Achieving a high rate of return over time is not about having consistent success, but making many well-reasoned investments, accepting that not all will succeed. The success of Berkshire Hathaway lies in having fewer losers and more winners by making numerous investments and focusing on a few big winners held for long periods. It is essential to accept that not every investment will yield high returns, but overall success is achieved by the ratio of winners to losers and the magnitude of gains relative to losses. Refusing to take risks hinders progress in the investment process.