Business Risk Owning a stock means owning a piece of a business. Accordingly, Buffett noted there are several key business risks. The first involves capital structure. A company with a ton of debt could be a candidate for foreclosure. The second relates to the nature of the business and its capital requirements. With commercial airlines, for example, tons of capital is required upfront, and competition is intense. A third risk occurs with commodity businesses. Unless you’re the low-cost producer, these are poor businesses to own. Overall, Berkshire seeks low-risk businesses with sustainable
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