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Welcome to The Moat Investor!

I’m a firm believer of two important ideas. First, we should all drive our own portfolio and know what we own. Second, investing is not as hard as others might have you believe.

My mission is to provide the knowledge works that allows you to manage your stock portfolio. You can rely on me to narrow down the universe of stocks that you need to consider for your portfolio. I hope to be your source for building a long-term portfolio of quality companies protected by economic moats.

If this is your first time on my site, I know selecting stocks can be intimidating. That’s why I created this page. On this page you will learn why economic moats matter, how I research companies and my investing principals that you can adopt as well. 

Economic moats matter

Economic moats are no different or any more complicated than a moat around a castle. An economic moat refers to a company’s ability to defend its profit making center(s) by surrounding itself with competitive advantages. As it relates to a company, economic moats can come in a variety of ways. Consider the following quote:

“A truly great business must have an enduring moat that protects excellent returns on invested capital. The dynamics of capitalism guarantees that competitors will repeatedly assault any business castle that is earning high returns. Therefore, a formidable barrier such as a company being the lowest cost producer or possessing a powerful worldwide brand is essential for sustained success. Business history is filled with ‘Roman candle’ companies whose moats proved illusory and were crossed.”

Warren Buffett – Berkshire Hathaway Annual Shareholder Letter 2007

Sensible right? Why would anyone invest in a company that did not have a moat? That’s a question for another day. The tricky part of searching for companies with moats or competitive advantages is that there is no line item in a financial statement that says ‘moat.’

This is where I come in

I spent more than two decades as an analyst overseeing the investment direction of $500+ million. I learned a lot over the arc of my career. In the course of researching companies for inclusion in client portfolios, I realized there are a relative few companies worth owning for the long-term. The common trait among worthy companies was competitive advantages that allowed the company to have a moat around its profit centers. Since the ah-ha moment of moats mattering, I’ve honed my moat researching skills by studying other famed investors like Warren Buffett, Terry Smith, Tom Marsico and Ron Baron. 

I’ve refined a process that narrows down the universe of stocks available at most brokers from over 27,000 to a universe of ~80 stocks. No, I don’t own all 80 or recommend that you do either. I do own almost half of them though. The point is the 80 stocks in my research universe are all quality companies with economic moats. From this small list of companies, one can easily build a solid portfolio of stocks to own for the long-term.

The Moat Investor is here to do the heavy research for you. Along the way, subscribers to my weekly newsletter, Moatr, and posts to the site will keep you well informed on markets and tips for your portfolio.

My investing principals

Having been at this game long enough, I’ve developed a list of principals that has helped guide me (and clients). Below is a quick list of investment principals.  See my page dedicated to this topic for more details.

  1. Have an emergency fund before investing in stocks
  2. Buy quality companies
  3. If you don’t know what a company does move on to the next company
  4. Hold stocks for the long-term
  5. Don’t get hung up on price being paid for a stock you plan to hold for the long-term
  6. Don’t be swayed away from your investment rationale
  7. Read the annual reports of your portfolio companies
  8. Let winners run
  9. Cut stocks that lose their moat quickly
  10. Don’t make investment decisions around economics or emotions

A few philosophical items

  1. Long-term investing is an infinite game. As such, staying in the game is the largest contributor to success. Even Investors like Buffett have admitted that one of the keys to his track record is the amount of time he has spent in the game.
  2. You should be more concerned with being directionally correct on your investments than absolutely correct.
  3. The default stance of market direction is up and to the right unless there is a reason to not. What are those reasons? Since 1913, when the current US Fed came into existence, the answer has often been the credit cycle engineered by global central banks. There are also wars. But, wars do not always result in bad stock market returns.

Must read posts

Below is a short list of posts that, if read in order, will give you a real flavor of my thinking and approach.

Why do the world’s best investors look for economic moats?
It’s time to drive your portfolio
Building a portfolio of quality companies
The case against index funds as an investment
How to build a stock portfolio
An Investing Checklist

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