The biblical tale of Adam and Eve illustrates how yielding to temptation caused their expulsion from paradise into a more challenging existence. Warren Buffett observes a comparable temptation for thriving businesses that have discovered a prosperous niche, yet strive for additional opportunities.
“I pointed out the danger of having a wonderful business is the temptation to go into less wonderful businesses,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “And it’s a risk I pointed out that when a company with a wonderful business gets into a mediocre business that usually the reputation of the mediocre business prevails over the supposed invincibility of the management of the wonderful business.”
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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.