Further Survey on Pabrai's Perfect Portfolio

I recently read Evan Vanderveer's great article at GuruFocus.com - Pabrai's Perfect Portfolio - about how Pabrai build up his portfolio.

Concepts of Pabrai's Perfect Portfolio
I highlight some brilliant portfolio concepts :

• How much to buy is as important as what to buy.
  
• The Ten by Ten Portfolio
• Pabrai holds 7~15 different investments, but appears to stay close to the ten by ten benchmark.
• The portfolio attempts to ensure only the best ideas get in.
• Placeholder Concept
• Putting the money in the hands of the world’s greatest investor seems like a better idea than leaving dollars in the bank.
• “Productive commodity hedge against a declining dollar.”
  
• Yellowstone Factor
• No matter how small the probability an event might occur, the risk must be taken into consideration.
• No business on earth is totally risk free. There is always a Yellowstone.
• First fixate on what factors can cause the investment to result in a significant permanent loss of capital.
• By limiting holdings, hedging against the declining dollar, and estimating risk,
  

Yellowstone Factor: Minimizing Downside Risk
Among these concepts, "Yellowstone factor" caught my eyes. I did a little survey and found that Pabrai's original article - The Yellowstone Factor: Minimizing Downside Risk - on 2004/02/09. In this article, Pabrai talks more details about Yellowstone concept - what it means, how to figure out the probabilities etc. Pabrai point out at The Yellowstone Factor: Minimizing Downside Risk :

• Consider factors that can cause your investment to result in a significant permanent loss of capital.
• Buying fractions of a well-run, well-understood good business starts to put the odds in your favor.
  

Yellowstone = Black Swan ?
"Yellowstone represents just one of the many ugly outlying events that have an extremely low probability of occurring, but that does not mean the odds are zero or that they can be ignored." said by Pabrai.

Looking into this explanation of Yellowstone, "The Black Swan" concept pops up in my head. It seems to me that Yellowstone and Black Swan all mean the same thing - low probability but huge impact case or use Pabrai's term : low uncertainty but high risk case.

Do'nt ignore six sigma events
Pabrai said "You always need to be cognizant of six sigma events that can have an ugly impact on your portfolio and account for the approximate probabilities." remind us - don't bypass this very low probability but huge impact events when we build our portfolio. If you just ignore them, someday they will cost you a lot of money !