At the heart of every complicated strategy are a few critical assumptions upon which those strategies turn. Get the assumptions right, and you still have a lot of work to do. Get them wrong, and almost nothing else matters. Assume, for example, that film is a growth business in the face of digital photography, and you’ll squander billions looking for it. Assume there are synergies between AOL and Time Warner, and you’ll destroy hundreds of billions in value.

Getting the assumptions right is critical in business, and in the rest of life, too—even taxes.

Part of the problem with bad assumptions is that we forget we make them, so we continue down the wrong path long after our assumptions have been disproved. The debate about the fairness of taxes that Warren Buffett kicked off recently is a great example of assumptions that have been forgotten or ignored.

Read the full article at my Forbes.com blog.

We’ve often quoted the Warren Buffett line that is the lead in this New York Times article to make the case that Buffett himself makes in his latest letter to shareholders: You can’t trust your investment bankers’ advice on an acquisition any more than you should ask a barber whether you need a haircut.

It’s not that investment bankers are stupid. Far from it. It’s not that they’re venal. Some surely are, but many very much have the best interests of their clients in mind. The problem is the incentives.

Read Paul’s review of of Alice Schroeder’s “The Snowball: Warren Buffet and the Business of Life” in today’s Wall Street Journal. Here is an excerpt:

While much of Mr. Buffett’s methods can’t be duplicated — genius is genius, after all — “The Snowball” usefully emphasizes a few core Buffett imperatives: taking a close look at an investment’s intrinsic value, making a brutal evaluation of its risks, and calculating a margin of safety. The book also underscores the importance of learning from failures. The Buffett-Munger approach is to “invert, always invert. Turn a situation or problem upside down. Look at it backward. What’s in it for the other guy? What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead.”

Here’s the link to the full article.