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Business
Economic Moat
A sustainable competitive advantage that protects a company from rivals, like a castle moat.
Warren Buffett loves companies with wide economic moats. Common moats include strong brands, network effects, cost advantages, patents, and switching costs. The wider the moat, the more predictable and valuable the long-term profits.
It's the deep, alligator-filled ditch that stops other companies from easily stealing the castle's treasure.
Real world: Coca-Cola's brand, secret formula, and global distribution network create a wide economic moat. New soft-drink companies find it almost impossible to compete on the same level.
💡 A strong economic moat turns a good company into a wealth-building machine.