Competitive Moats

What protects a great business from competitors, the five main kinds of moat, how moats show up in the numbers, and how moats erode.

Why most profits get competed away

When a business earns high profits, competitors notice and rush in, cutting prices and stealing customers until profits fall back to average. A competitive moat is a lasting advantage that stops this from happening. Companies with wide moats can earn above-average returns for many years, which is exactly what long-term investors look for.

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