Risk Comes from Not Knowing What You’re Doing

First, Warren Buffett eliminates the financial risk associated with debt financing by excluding from purchase those companies with high debt levels. Second, business risk is reduced, if not eliminated, by focusing on companies with consistent and predictable earnings. “I put a heavy weight on certainty,” he says. “If you do that, the whole idea of a risk factor doesn’t make any sense to me. Risk comes from not knowing what you’re doing”.

– Warren Edward Buffett, American business magnate, investor, and philanthropist

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