In other words, they come up with a range of estimates for earnings, but they only buy

when a trading at a discount to their bear case rickie.

This is so huge, they buy at a discount to their worst case scenario.

So that, combined with the low absolute PE ratios that they pay, combined with the wide

mode, businesses they invest in, that is where their margin of safety comes from.

The

most fired up I've seen you come into a podcast.

Todd Combs is one of the stock picking lieutenants under Buffett and Munger.

So you studied it for 20 years.

What did you know or what did investors know about Buffett's criteria for picking stocks

and investments before Todd Combs does this interview with investor Michael Mobison?

That's right.

So the article of Michael Mobison's interview with Todd Combs published November 4, 2022.

So very recent.

Before that, before Todd Combs revealed this framework that he uses to pick stocks with

Warren Buffett, we could piece together quite a bit by one reading Warren Buffett's letters

and two trying to reverse engineer the valuations that Buffett paid for stocks and for whole

businesses in the past.

For example, in his 1984 letter, when interest rates were much higher by the way, he wrote,

quote, in the average negotiated business transaction, unleveraged corporate earnings

of 22.7 million after tax equivalent to about 45 million pre-tax might command a price

of $250 to $300 million or sometimes far more.

...