At Berkshire Hathaway Inc’s annual meeting this past weekend, Warren Buffett invited short-seller Doug Kass* of SeaBreeze Partners to join his panel in a Q&A session. Kass is rooting for Berkshire to go under, and Buffett wanted Kass to query the company in front of all its shareholders.

What kind of CEO does that?? That’s like Obama inviting Rand Paul to give a response at the State of the Union address.

Jason Zweig calls it inviting doubt [1], but Buffett does not doubt himself. Buffett knows his process inside and out. It’s his investment decisions that he wants to doubt.

It is important to separate yourself from your decisions.

While it is possible to fully know yourself and your process, it is impossible to know everything about an investment, as that would require knowing the future. Even if you have a perfect system, errors will still happen due to the fact that the system is operating on incomplete information. Minimize the incompleteness of the information by encouraging criticism.

This encompasses Ray Dalio’s Fundamental Principle of Truth: An accurate understanding of reality is the essential foundation for producing good outcomes [2].

It also leads to another key Principle – Do not feel bad about your mistakes. Mistakes happen as a result of incomplete information. You are not your mistakes. Feeling bad about mistakes prevents you from learning from them.

Even Doug Kass knows this – he worships Buffett (It’s actually Berkshire’s investors that he doubts [3]).

*Interesting fact: Long-Term Capital Management was also short Berkshire. Kass is in good company.

1. A Lesson From Buffett: Doubt Yourself –wsj.com

2. Principles, by Ray Dalio — written as a management handbook, but the lessons apply to everything in life.

3. Kass Katch: 11 Reasons to Short Berkshire –TheStreet, from 2008, but not much has changed.