Letters by Topic

Letters on Opportunity Cost

The return forgone by choosing one investment over the next-best alternative — Buffett's hidden yardstick.

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1997·Waiting for the fat pitch — every passed opportunity preserves capital for the best one (1997 letter)

In his book The Science of Hitting, Ted explains that he carved the strike zone into 77 cells... Swinging only at balls in his 'best' cell, he knew, would allow him to bat .400... waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors.

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Opportunity Cost is one of the ideas behind the ValueOS tools. See it applied to real companies.

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