I admit I’ve been lazy too long to continue with this blog. But on the go of figuring out what’s stucked and what must go on to become a better wiser more thoughtful man, I choose to keep reading and writing what I think they are good for our thinking and investing (value investing for sure, undeniablely).
I’m grateful for The Manual of Ideas book on finding finest investment ideas for a typical value investor as mentioned beforehand in many posts of my blog like this one. Thanks to it, I’ve been known John Mihaljevic – the author cum founder of MOI Global. What he’s been giving to the investment community by his way of sharing of knowledge, talks to me is very complimentary and I’ve got deeper honor to him and his treasure source of wisdoms.
Today to be reminiscent of moats, the always-most-discussed-about topic by Pat Dorsey was chosen to keep moving forward.
I’ve been thinking about it no doubt directly or indirectly during my works these days. Because under the angle of an investor or a manager, moats are what we always thinking of them and find ways to build them up and expand those.
According to Pat Dorsey:
A moat is structural and sustainable. I think those are the two key things for investors to think about. It’s structural in that it’s inherent to the business. The Tiffany brand is inherent to Tiffany [TIF]; you can’t imagine Tiffany without it. The switching costs of an Oracle [ORCL] database are inherent to the way databases are used in business. Contrast that with a hot product or a piece of a hot technology that may come or go.
Moats are also sustainable. They are likely to be there in the future. As investors, we are buying the future. Look at the investments we make today. How they turn out will depend largely on what happens three years from now, five years from now, or ten years from now. So, we need to think about sustainability of a competitive advantage. A company with a very hot product and a cool brand right now may have very high returns on capital, but the sustainability is in question. Whereas you can look at a railroad or a pipeline that would not have as high returns on capital as an Abercrombie & Fitch [ANF], but it’s very sustainable because you can predict the likelihood of that competitive advantage sticking around for many years, and that makes the investment process easier.
Hope what Pat Dorsey elaborates will keep us easier to find and build moats. It’s always started with the finest ideas as I always contemplate Doing the right things first then do things right!
- From now on, maybe all posts will be written in English as random thoughts or just a sharing. Maybe a litte bit of undisciplined but it keeps this blog moving on and have something we’ve discussed about.
- I’ve read The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments a couple of years ago. It’ written in a very easy-to-read-and-understand style and I think finest minds write finest ideas for those care. Hope you enjoy reading this book also.
- Another book by Pat Dorsey is The Five Rules for Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market as I check the table of content, it likely is rewritten by all the years of reading and practicing Ben Graham, Warren Buffet-likely investing style but under the elegance of public appealing, so I will read it too and recommend for those interested in also.
Have a nice weekend my friends!