Michael Mauboussin's insights on economic moats highlight their critical role in sustaining competitive advantages and driving long-term value creation.
😅 I was also inspired to write about moats after seeing many Substack posts on the topic. However I have my own questions about this topic so I try to approach it with different tools, focusing more on numbers—such as weighted average cost of capital (WACC) versus return on invested capital (ROIC) and the value stick—rather than solely highlighting the quality of the moats themselves. It’s a challenging subject, and many investors mistakenly believe their portfolios have moats, when in reality, it’s just a persona or marketing gimmick.
This image made me remember that some timea back I was also thinking to write on Moats🤣😋
😅 I was also inspired to write about moats after seeing many Substack posts on the topic. However I have my own questions about this topic so I try to approach it with different tools, focusing more on numbers—such as weighted average cost of capital (WACC) versus return on invested capital (ROIC) and the value stick—rather than solely highlighting the quality of the moats themselves. It’s a challenging subject, and many investors mistakenly believe their portfolios have moats, when in reality, it’s just a persona or marketing gimmick.
Often people skip WACC and look only at ROIC
This happens too often
Love the article!