Warren Buffett believes that how a company navigates challenges reveals critical insights about its true resilience and competitive advantage. A business that endures hardship and emerges stronger demonstrates not only its durability but also the strength of its economic moat—the protective advantage that keeps competitors at bay.
At the 2000 Berkshire Hathaway Annual Meeting, Buffett explained, “If you see a business take a lot of adversity and still do well, that tells you something about the underlying strength of the business.” He cited Coca-Cola as an example, noting how the company overcame setbacks such as the New Coke failure and issues in Europe, only to rebound stronger each time.
For investors, these moments of adversity serve as valuable tests. Companies that can weather difficulties and maintain their competitive edge often have the resilience and structural advantages necessary for long-term success.
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© 2025 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.