Letter
Warren Buffett · 2009
A first-hand account of the 2008 crisis from an investor buying through it, with candid mistakes and sharp warnings on derivatives, history-based models and the pricing of risk.
Ask what period a model was fitted to, and whether that period contained the event you are worried about.
Any risk model, stress test or structured product that reports a probability of loss.
The price of risk tracks the mood, so the useful time to buy is when the mood is worst, and the dangerous time is when it is best.
Any question about market timing, contrarian investing or what to do in a crisis.