Investing is a balance between hard data and good judgment. As Warren Buffett put it in his 1967 Partnership Letter, “The evaluation of securities and businesses for investment purposes has always involved a mixture of qualitative and quantitative factors.”
On one side, you’ve got the believers in business fundamentals—the ones who say, “Buy the right company (with the right prospects, inherent industry conditions, management, etc.) and the price will take care of itself.” They think if you pick a great business, everything else will fall into place.
Then, there’s the other crowd, the numbers-first folks, who argue, “Buy at the right price and the company (and stock) will take care of itself.” In other words, price is king. If you get in at the right valuation, you’re golden, no matter how the company itself plays out.
But here’s the kicker—both approaches work. Like Buffett said, “As is so often the pleasant result in the securities world, money can be made with either approach.” The real question is: which approach do you lean on?
Buffett himself admits he’s mostly a numbers guy. “I consider myself to be primarily in the quantitative school (and as I write this no one has come back from recess—I may be the only one left in the class).” That’s classic Buffett humor, but there’s truth in it. He’s known for hunting down value, making decisions based on cold, hard facts.
And yet, the biggest wins? They come from something deeper than just numbers. Buffett says, “The really sensational ideas I have had over the years have been heavily weighted toward the qualitative side where I have had a ‘high-probability insight.’”
That’s what separates a good investor from a great one—the ability to spot something the numbers don’t quite capture.
But let’s be real—those moments of clarity are rare. “It is an infrequent occurrence, as insights usually are,” Buffett admits. No one’s having earth-shattering investment epiphanies every day. That’s why the numbers still matter. As he puts it, “No insight is required on the quantitative side—the figures should hit you over the head with a baseball bat.”
So where does that leave us? The truly big money, Buffett believes, belongs to those who get the qualitative decisions right. He’s not saying to ignore the numbers, but he knows instinct, experience, and judgment play a massive role.
You can find the letter among a collection here:
1967 Buffett Partnership Letter
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