Lessons From Warren Buffett: Avoid Low Barrier to Entry Businesses

New types of businesses are popping up all the time. It is the nature of the business world that people throw their hats in the ring and launch new enterprises. For Warren Buffett, as a long term investor, he is looking for businesses that have a high barrier to entry that keeps them from being swamped with competitors.

“There are some industries that are just never going to have barriers to entry,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “And in those industries, you better be running very fast because there are a lot of other people that are going to be running and looking at what you’re doing and trying to figure out, you know, what your weakness is or what they can do a little bit better.”

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© 2021 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.

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