In his most recent annual letter, Warren Buffett re-stated his thought on chances. In one of his talk with students, he told them a story of his philosophy on investing. If someone would give him a gun with only one chamber and tell him to pull a trigger, the survival would get $1 billion. Buffett would not do it as upside is set for $1 billion and the downside is too clear. Even if the gun has 1 million empty chamber, the downside is still clear. He would never pull the trigger nor participate in that kind of game. And yet, there are countless speculators in the market who would engage in stock trades that will leave them broke.
The below except told his philosophy in a different way. if there’s even a small chance something could happen, start preparing NOW.
It seems highly likely to me that climate change poses a major problem for the planet. I say “highly likely” rather than “certain” because I have no scientific aptitude and remember well the dire predictions of most “experts” about Y2K. It would be foolish, however, for me or anyone to demand 100% proof of huge forthcoming damage to the world if that outcome seemed at all possible and if prompt action had even a small chance of thwarting the danger.
This issue bears a similarity to Pascal’s Wager on the Existence of God. Pascal, it may be recalled, argued that if there were only a tiny probability that God truly existed, it made sense to behave as if He did because the rewards could be infinite whereas the lack of belief risked eternal misery. Likewise, if there is only a 1% chance the planet is heading toward a truly major disaster and delay means passing a point of no return, inaction now is foolhardy. Call this Noah’s Law: If an ark may be essential for survival, begin building it today, no matter how cloudless the skies appear.