Summing up: A company must be stable and understandable Finding a company that is stable and understandable is paramount because it reduces risk. In the end, we are trying to determine the value of a company (or stock). This can only be accomplished with minimal risk if we can reasonably assess and predict the direction of the company’s future earnings. By only investing in companies with a durable competitive advantage, you also reduce long-term risks. A moat can come in the form of intangibles, low-cost structures, and high switching costs (or stickiness).
