An "economic moat" is a company's ability to maintain a competitive advantage, helping it protect its profits and market share over time. Warren Buffet explains this concept in a quick two-minute video, and Investopedia offers a brief article for further reading.
Morningstar provides a structured framework for understanding economic moats. While it's a good starting point, real-world scenarios don’t always fit neatly into predefined categories. For example, where would you classify operational know-how, like strong supplier relationships in a fragmented industry? This framework serves as a helpful map, but it’s not the complete territory. It encourages further exploration.
At the end of the day, the ultimate goal for businesses is to build a strong moat, while for us as investors, it’s about finding companies with moats at good prices. That’s the key to long-term success. Here’s to smart investing - Moat Mind.