My learning for this weekend is based on the book 'Little book that builds wealth' by Pat Dorsey.
The book is all about identifying economic moats which are companies which have a competitive advantage in the market they operate, protected from competition and ability to earn more money for a long time.
Economic moats can be broken down into three categories
1. Intangibles either in the form of brand, patent, technology, regulatory environment etc
2. Network effects through multiplying customers through ones reach in manufacturing, distribution and reach.
3. Customer switching costs which ensures hanging on to the customer giving it pricing power.
4 Cost advantages from process, location, scale or access to a unique market.
A caveat is one of the above characteristics with a reasonable valuation and you have found an economic moat...Let's find a few!
The book is all about identifying economic moats which are companies which have a competitive advantage in the market they operate, protected from competition and ability to earn more money for a long time.
Economic moats can be broken down into three categories
1. Intangibles either in the form of brand, patent, technology, regulatory environment etc
2. Network effects through multiplying customers through ones reach in manufacturing, distribution and reach.
3. Customer switching costs which ensures hanging on to the customer giving it pricing power.
4 Cost advantages from process, location, scale or access to a unique market.
A caveat is one of the above characteristics with a reasonable valuation and you have found an economic moat...Let's find a few!
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