To Buffett, if it’s rational, it’s conservative. Period. Sometimes this approach ends up being conventional and sometimes it doesn’t. As he said, “you will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct. True conservatism is only possible through knowledge and reason.” In investing, the herd typically gets it wrong. The best time to be a buyer of securities is when the mob is most fearful. When even the taxi drivers are talking about their stock portfolios, it’s prudent to be cautious.
