What is a moat? In Buffett's investment, the moat actually refers to the core competitiveness of the invested enterprise in a certain aspect. The moat specifically includes the following points.
1. Monopoly Buffett is particularly optimistic about monopoly companies. Compared with other companies, the competitiveness of a monopoly company in a certain industry is unmatched. At the same time, it has relatively strong scale advantages and price advantages. , pricing advantages, and the ability to obtain higher and more lasting profit growth through monopoly.
2. Brand advantage: A company can scale up by just increasing investment, but it takes several generations of efforts for a company to establish a brand advantage. This is the main reason why Buffett is optimistic about Coca-Cola in the long term. The reason is that he said that if he exchanged 100 billion US dollars for Coca-Cola, he would definitely not change it. Brand advantage is the long-term precipitation and accumulation of a company, and it is difficult to be imitated and surpassed.
3. Franchising In fact, franchising has excluded other competitors. This type of enterprise is relatively stable in the market, has steady growth in net profit, and has strong product pricing power.
4. Customer loyalty Compared with the scale effect of enterprises, Buffett values ????customer loyalty more. Companies with high loyalty usually have unique reputation advantages, which is an inexhaustible driving force for the long-term development of enterprises. Of course, Buffett's moat also includes the company's technological advantages, patents, etc., which are equally important. In short, investment is to find companies with core competitiveness and hold them for the long term. (This information is for reference only and does not constitute investment advice. You should carefully evaluate when investing)