Lessons From Warren Buffett

Lessons From Warren Buffett: How Warren Buffett Thinks About Risk

Risk for Warren Buffett is not just the risk that a business has at the moment, but also includes the risks it may face many years in the future.

“We think of business risk in terms of what can happen, say 5, 10, 15 years from now, that will destroy, or modify, or reduce the economic strengths that we perceive currently exist in a business,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “When we look at businesses, we try to think of what can go wrong with them. We try to look [for] businesses that are good businesses now, and we think about what can go wrong with them. If we can think of very much that can go wrong with them, we just forget it. We are not in the business of assuming a lot of risk in businesses.”

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© 2023 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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