The Power of Durable Moats
July 3rd
The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.
While it's tempting to focus on industries set to revolutionize society or those predicted to experience exponential growth, the emphasis should instead be on understanding a company's competitive advantage and the longevity of that advantage. This isn't about any competitive advantage, but those robust enough to stand the test of time. A unique selling proposition today isn't enough. This advantage must be durable, able to withstand market changes, competition, and time.
This concept aligns with the principle of "moat investing," where a "moat" is a metaphor for the attributes that protect a company from competitors. The goal is to identify companies with wide, durable moats that can maintain their competitive edge over the long term.
Investing requires a deeper level of analysis. It's not about following trends or getting swayed by industry hype. It's about understanding a company's strengths, its competitive edge, and how long it can sustain that edge. Recognizing these factors could be the difference between short-term gains and long-term success.
Copyright © 2023 by Scott Sansovich