Warren Buffet refuses to invest in businesses without this...
Let us teach you๐
Let us teach you๐
Introducing the term "Economic MOAT"
A Moat is a sustainable competitive advantage that protects the business and creates long term profitability.
A Moat is a sustainable competitive advantage that protects the business and creates long term profitability.
A few examples of some economic moats include:
-intangible assets moat
-brand
-switching costs
-recurring revenue
-size advantage
Let's learn more about these moats๐
-intangible assets moat
-brand
-switching costs
-recurring revenue
-size advantage
Let's learn more about these moats๐
1/
Intangible assets moat
This refers to a business selling a product or service that cannot be copied due to trade marks or patents.
An example of a well known patent in South Africa is purple groups fractionalised shares patent.
Intangible assets moat
This refers to a business selling a product or service that cannot be copied due to trade marks or patents.
An example of a well known patent in South Africa is purple groups fractionalised shares patent.
2/
Brand
Sometime, the brand is so well known that it becomes a competitive advantage.
Apple, Tesla, Coca-Cola... these are all companies with extremely well known brands that consumers more often than not choose over competitors.
Brand
Sometime, the brand is so well known that it becomes a competitive advantage.
Apple, Tesla, Coca-Cola... these are all companies with extremely well known brands that consumers more often than not choose over competitors.
3/
Switching costs
When a customer wants switch from one business to another, there can be high switching costs to do so
This often prevents consumers from switching
Eg. If you want to buy a new cell phone there are high costs with buying one, not to mention the time it takes
Switching costs
When a customer wants switch from one business to another, there can be high switching costs to do so
This often prevents consumers from switching
Eg. If you want to buy a new cell phone there are high costs with buying one, not to mention the time it takes
4/
Recurring revenue
This is a moat because businesses with recurring revenue, the business is guarenteed a certain amount of revenue.
This helps the business with Budgeting, stocking inventory and investing in growth.
Recurring revenue
This is a moat because businesses with recurring revenue, the business is guarenteed a certain amount of revenue.
This helps the business with Budgeting, stocking inventory and investing in growth.
5/
Size advantage.
Large companies have more resources over an up and coming company which could drive them out of the market.
The could produce more products and sell them at a lower cost or even start price wars that smaller companies can't afford.
Size advantage.
Large companies have more resources over an up and coming company which could drive them out of the market.
The could produce more products and sell them at a lower cost or even start price wars that smaller companies can't afford.
There are many more moats out there that we have left out, feel free to share some for others in the comments๐ช
That's all from us today.
Be sure to like & rt this thread and follow us @FinMeUp for more investing content!
That's all from us today.
Be sure to like & rt this thread and follow us @FinMeUp for more investing content!
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