Warren Buffett is the most successful investor of all time (Net worth >$100B)
Part of this success is thanks to his ability to identify businesses with HUGE moats
But few people know what a 'moat' is OR how to to identify one
So let me break it down for you:
Part of this success is thanks to his ability to identify businesses with HUGE moats
But few people know what a 'moat' is OR how to to identify one
So let me break it down for you:
What is a moat?
A moat refers to a business's ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms
Just as the moat of a castle protects the riches of its occupiers from outsiders...
A moat refers to a business's ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms
Just as the moat of a castle protects the riches of its occupiers from outsiders...
Moats make businesses more durable
And they enable them to sustain higher returns for longer
This also means they can reinvest those profits at higher rates than their competitors
This is a key component of multi-bagger stocks (stocks that multiply your money)
And they enable them to sustain higher returns for longer
This also means they can reinvest those profits at higher rates than their competitors
This is a key component of multi-bagger stocks (stocks that multiply your money)
Moats take on various forms
A stock with a wide moat can produce better returns for longer
So knowing what to look for can be huge for your portfolio returns
Let's dive into the 5 types of moat to look out for:
A stock with a wide moat can produce better returns for longer
So knowing what to look for can be huge for your portfolio returns
Let's dive into the 5 types of moat to look out for:
1. A strong brand
Tiffany's has a moat
People pay up just to get their jewellery in that blue box
Even though, what's inside can likely be had elsewhere for less
Also, Oreo - this brand may not allow for premium prices, but it inspires loyalty and ensures returning customers
Tiffany's has a moat
People pay up just to get their jewellery in that blue box
Even though, what's inside can likely be had elsewhere for less
Also, Oreo - this brand may not allow for premium prices, but it inspires loyalty and ensures returning customers
2. It costs a lot to switch
Banks - They may not have much of a competitive advantage over one another, as they all have the same products
Yet, looking at the numbers, people don't switch very often
The reason: It's a huge pain to change banks
The moat = High switching costs
Banks - They may not have much of a competitive advantage over one another, as they all have the same products
Yet, looking at the numbers, people don't switch very often
The reason: It's a huge pain to change banks
The moat = High switching costs
3. The network effect
Microsoft had a great moat for years!
Everyone used its operating system, so you wanted to use it too
The more people who use them, the more they enjoy the benefits of the networking effect
Social media platforms are the same...
Microsoft had a great moat for years!
Everyone used its operating system, so you wanted to use it too
The more people who use them, the more they enjoy the benefits of the networking effect
Social media platforms are the same...
When you think of Facebook, Twitter and Youtube
It's hard to imagine any competitor coming in and replacing these specific user experiences and products
It's like trying to sell the first telephone
It's hard to imagine any competitor coming in and replacing these specific user experiences and products
It's like trying to sell the first telephone
4. Lower costs
If you are the 'low-cost guy', like Walmart, you have a moat
Interactive brokers was cheaper than every other discount broker for years by a long way
This enabled it to grow twice as fast as its competitors
This is a great moat to have
If you are the 'low-cost guy', like Walmart, you have a moat
Interactive brokers was cheaper than every other discount broker for years by a long way
This enabled it to grow twice as fast as its competitors
This is a great moat to have
5. You're the biggest
There are inherent advantages of sheer size
Being the biggest is an advantage if it keeps competitors out
Imagine what it would take to replace a Walmart or an Apple
Competitors are unlikely to invest the time and energy necessary to compete
There are inherent advantages of sheer size
Being the biggest is an advantage if it keeps competitors out
Imagine what it would take to replace a Walmart or an Apple
Competitors are unlikely to invest the time and energy necessary to compete
TL;DR:
1. A strong brand
2. High switching 'costs'
3. Networking effect
4. Lower costs
5. Being big
If you're new to investing
And you want to learn more lessons like this to seriously level up your game...
1. A strong brand
2. High switching 'costs'
3. Networking effect
4. Lower costs
5. Being big
If you're new to investing
And you want to learn more lessons like this to seriously level up your game...
Get access to all the knowledge you need to be able multiply your money in the stock market
With the 19 courses, video presentations & guides inside The Investing Masterclass Sessions
70% off
20 copies only!
Click here to see the current curriculum 👇
financiallysavvy.gumroad.com
With the 19 courses, video presentations & guides inside The Investing Masterclass Sessions
70% off
20 copies only!
Click here to see the current curriculum 👇
financiallysavvy.gumroad.com
Today I'm adding another lesson
After this sale, the price goes up by $30
After this sale, the price goes up by $30
5 gone already
15 left
15 left
13 left
70% off
70% off
Final 10 copies
70% off
70% off
9 left
Loading suggestions...