Howard Marks pointed out the following rules for a value investor: “Rule No. 1: Most things will prove to be cyclical. Rule No. 2: Some of the greatest opportunities for gain and loss come when other people forget Rule No. 1.”8 Buffett has his own version of this which states: “Rule No. 1 is never lose money. Rule No. 2 is never forget rule number one.”9 Berkshire’s results must be compared with alternatives on a risk-adjusted basis.
