"Risk comes from not knowing what you're doing."
-- Warren Buffett
"You can observe a lot by just watching." -- Yogi BerraI believe the principle reason is Warren Buffet's investment style drift, which was reflected in a large derivative loss in first quarter 2008. Let me explain. As a dedicated short seller I often take a variant view of a company's prospects through logic of argument and analytical dissection, mocking conventional wisdom and the associated popularity surrounding certain investments that, in my view, created an unwarranted degree of optimism in the marketplace. Indeed, some of my best investment shorts -- including Ron Perlman's Marvel Entertainment (MRVL - Get Report) in the early 1990s, after which it filed bankruptcy; America Online, coincident with its 2001 acquisition of Time Warner (TWX - Get Report); homebuilding companies, a favorite of the momentum crowd in 2004; or private mortgage and credit insurers in 2006 -- initially triggered ridicule by many market participants as my targeted stock market icons (and shorts) were typically seen as Teflon. If one reads some of the great investment books that chronicles legendary traders/investors successes -- such as Jack Schwager's Market Wizards: Interviews with Top Traders -- there is common thread to the successes of Soros Fund Management's George Soros, Duquesne's Stanley Druckenmiller, Fidelity's Peter Lynch, Capital Growth Management's Ken Heebner, Omega Advisors' Leon Cooperman, SAC's Steve Cohen and Steinhardt Partners' Michael Steinhardt: They consistently stick to their knitting and avoid style drift. Not surprisingly, when I initially explained the rationale behind shorting Berkshire Hathaway in March 2008, I received a lot of criticism, particularly from some of my hedge fund heavyweight friends who I respect immensely. Frankly, it was hard for me to write that piece as I have worshipped at the altar of Warren Buffett over the years.