The most surprising thing about Warren Buffett is that he can still surprise. After all, more ink has likely been spilled dissecting Buffett's strategies than those of any other investor. Buffett became the world's richest person while displaying both integrity and wit.

So it's natural that people listen when Buffett speaks. But he's been saying the same things since the 1960s. What more is there to learn from him?

Yet in the recent Berkshire Hathaway shareholder meeting, Buffett professed his ignorance about some of Berkshire Hathaway's investments.

An astounding answer
One questioner asked how Buffett values the pipelines of pharmaceutical companies -- a great query. When a drug loses patent protection, generic competition typically swoops in with cheap copies, potentially reducing sales of that drug by billions of dollars overnight. As a result, drug companies have to constantly nurture a pipeline of new drugs. From this pipeline, the next blockbuster must arise in order to maintain and grow the company's revenue.

What's more, Buffett clearly likes the pharmaceutical businesses. Berkshire has stakes in GlaxoSmithKline (NYSE:GSK), Johnson & Johnson (NYSE:JNJ), and Sanofi-Aventis (NYSE:SNY) -- three huge drug companies.

So Buffett's answer -- that he doesn't really know the potential of the pipelines of the drug companies in which he's invested -- was remarkable.

Ignorance is bliss?
It seems incredible -- almost irresponsible -- for Buffett to ignore the pipelines of these companies. Investment analysts in the sector spend a large portion of their time analyzing what's coming through the pipeline. Yet that doesn't even make the radar for Buffett?

However, if you take a step back and think about it, Buffett's blissful inattention actually makes sense. If you know anything about Buffett, you know that:

  1. He's a long-term investor.
  2. He likes to own excellent businesses.
  3. He wants easy decisions.

Taken together, these characteristics imply that he doesn't need to know the details of drug companies' pipelines.

Truly long-term
At the meeting, Buffett pointed out that in five years, the pipeline will change. Remember, this is a guy who's owned Wells Fargo (NYSE:WFC) and American Express (NYSE:AXP) for decades -- five years is nothing. Buffett meant that if you're buying a company simply for its pipeline, you're buying for short-term reasons.

Buffett is aiming to hold forever, not gamble on whether or not some drug in the pipeline will be approved. He's looking for excellent businesses with sustainable competitive positions. The question for Buffett isn't whether there's a great drug in the pipeline; it's whether huge pharmaceutical companies are excellent businesses in the first place.

Buffett thinks they are. Big drug firms have piles of cash that allow them to develop or buy new medications. They have the resources, expertise, and contacts to shepherd attractive drugs through trials and gain approval by the FDA. Once a drug is approved, a patent gives a company a monopoly on a product that can save someone's life. It's hard to imagine a business with greater pricing power. And that matters far more than pipelines.

One-foot hurdles
Finally, Buffett's looking for easy decisions, which leads to two key criteria.

First, he won't even consider investing in businesses that are too difficult to understand. For example, even though Yahoo! (NASDAQ:YHOO) president Susan Decker sits on Berkshire's board of directors, it's unlikely that Berkshire would ever consider investing in Yahoo!. Technology investing is just too hard. New competition arises every day, and it's too hard to know when a breakthrough will render a technology obsolete.

Second, Buffett is looking to buy businesses cheaply enough that a slight error in his estimate of their worth won't really matter. He's not looking to buy stocks at a 10% discount to their fair value. He's looking for a 30% or 40% discount, minimum. When he bought PetroChina (NYSE:PTR), Buffett estimated that he was enjoying a 65% discount.

When buying at that sort of margin of safety, minor details are irrelevant. It doesn't matter whether PetroChina's oil fields will run dry in 2050 or 2055. Either way, the company's cheap. Similarly, it doesn't really matter whether any individual drug in the pipeline fails, as long as the pharmaceutical company you're buying is cheap, and as long as it has a great competitive position that will ensure its long-term success.

The most important takeaway for small investors
Valuation spreadsheets can encourage you to focus on details and provide false confidence. But the details are often trivial. Sure, it's worthwhile to know as much as possible about the companies in which you invest. But the most important parts to get right are the companies' competitive positions, and the price you're paying for the shares.

If you're a long-term investor buying excellent businesses at cheap prices, trivialities shouldn't matter. These are the types of opportunities on which our Inside Value team focuses. These days, we're finding some strong, growing businesses trading for 50% and 60% of what they're actually worth. If you want to check them out, we offer a 30-day free trial.

Fool contributor Richard Gibbons wants to be too difficult to understand, but is probably just trivially unimportant. He does not have a position in any of the stocks discussed in this article. The Motley Fool owns shares of Berkshire Hathaway. American Express and Berkshire Hathaway are Inside Value picks. Berkshire is also a Stock Advisor recommendation. GlaxoSmithKline and Johnson & Johnson are Income Investor selections. The Fool's disclosure policy is tasty with marmalade.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.